BUILDING MOMENTUM ANNUAL REPORT 2017-18
1 BUILDING MOMENTUM
150 Elgin Street 150 rue Elgin Post Office Box 1047 Case postale 1047 Ottawa, Ontario Ottawa (Ontario) K1P 5V8 K1P 5V8 1-800-263-5588 or 1-800-263-5588 ou 613-566-4414 613-566-4414 [email protected] [email protected] canadacouncil.ca conseildesarts.ca
The Canada Council for the Arts’ offices are located on the Cover: Mia Amir’s Geologic Formations premiered at the rEvolver Theatre Festival; traditional unceded territory of the Algonquin Nations. at The Clutch Greenhouse in Vancouver, in 2018. It is a bold blend of immersive multidisciplinary performance, intimate personal narration and theory. Photo: Javier R. Sotres
Inside front cover: Still from Queer Coolitudes: Indo-Caribbean Diasporas (release planned in the fall 2018) by Michelle Mohabeer. Queer Coolitudes: Published in Canada. Cat. No. K21-1E-PDF. ISSN 1493-5589 Indo-Caribbean Diasporas is a daring, inventive and experimental feature- length documentary (80 minutes), which is the first media work of its kind The 61st Annual Report of the Canada Council for the Arts and created in Canada about often under-represented and largely-invisible Queer supplementary information on grants, services and prizes are Indo-Caribbean diasporic communities. available on the Council’s website. 2 MANDATE
The Canada Council for the Arts is Canada’s public peaceful, equitable and sustainable future. The arts funder, with a mandate “to foster and promote Canada Council Art Bank operates art rental the study and enjoyment of, and the production of programs and helps further public engagement works in, the arts.” with contemporary arts.
The Council champions and invests in artistic The Council is governed by an 11-member Board. excellence through a broad range of grants, services, Members of the Board and the Director and CEO prizes and payments to professional Canadian are appointed by the Governor in Council. The artists and arts organizations. Its work ensures that Council works closely with federal, provincial, excellent, vibrant and diverse art and literature territorial and municipal arts and cultural agencies engages Canadians, enriches their communities and departments. and reaches markets around the world. A federal Crown corporation created through an The Council also raises public awareness and Act of Parliament in 1957, the Council reports to appreciation of the arts through its communications, Parliament through the Minister of Canadian research and arts promotion activities. It is Heritage. It receives funding from Parliament and responsible for the Canadian Commission for its annual budget is supplemented by endowment UNESCO which promotes the values and programs income, donations and bequests. of UNESCO in Canada to contribute to a more
3 TABLE OF CONTENTS
05 Message from the Chair
07 Message from the Director and CEO
09 Management’s Discussion and Analysis
39 Governance
45 Financial Statements
4 “OUR BOARD NOW BOASTS A STRONGER ARTS PROFILE AND ONE THAT IS MORE REPRESENTATIVE OF
CANADA’S DIVERSITY.”
Pierre Lassonde
55 Message from the Chair
When new members join a group, they often bring a contagious In the past year, the matter of making a digital shift was an important energy with them. That’s exactly what happened this year with the topic of discussion with the Board. In March 2018, members attended a arrival of six new members on the Canada Council for the Arts Board. retreat to better understand the various challenges that digital As a result, our Board now boasts a stronger arts profile and one that represents for the arts community in Canada and for the Council itself. is more representative of Canada’s diversity. From the outset, the new Digital culture and its many complex ramifications will be central to the Board members have demonstrated their commitment to the arts. As Board’s oversight of the Council’s progress on this front. public stewards, they are also keenly conscious of the publicly-funded arts community’s responsibilities towards society as a whole. In this The Council has helped to bring about an unprecedented regard, the Board has shown the kind of intelligence and wisdom in transformation in the Canadian arts community: it now provides governance that is expected now more than ever at the federal level. increased support to artistic creation and underpins the flourishing of an innovative and diversified arts scene that is attracting ever-growing The Board plays a key role in monitoring the sound management audiences. I would like to commend the architects of this transformation of the public funds entrusted to the Council. It must ensure the —the Council’s employees and management, especially the inspiring governance of the Council is dynamic, responsible and transparent. and courageous Simon Brault, for not only pursuing the fulfillment of Our members closely monitor the strategic work underway within commitments put forward, but also for often exceeding them, all the the organization, especially in terms of how well we are delivering on while maintaining the arts community’s trust. our major commitments. In particular, they recognize the importance of strategically and responsibly managing the Council’s additional The fact that the arts occupy an important place in our lives funds and then being accountable for the impact of its investment is also due to the efforts of all the Canadians who support the arts in the arts through the use of reliable performance indicators. and culture and their central role in our lives. I thank them all, and assure them that the Council will continue to live up to their Our members have also supported the progress made during this expectations and those of the Government of Canada whose first year of the new granting programs, particularly with initiatives to confidence in us we deeply value. increase the exposure of our artists abroad and Canadian leadership on the international scene. Over the past year, many projects and initiatives have been carried out on that front. Punctured Landscape, an exhibition initially launched in Ottawa, has become the most important exhibition devoted to Canadian artists in the history of the Art Museum of the Americas in Washington, D.C. The Council’s contribution to the success of the Games of La Francophonie and to Pierre Lassonde, C.M., O.Q. the work of the Salzburg Global Seminar enabled young Canadians Chair to showcase their performances and ideas to the world. In order to more fully grasp the scope of what the Council does, it is necessary to look at its various components, including the Canadian Commission for UNESCO, whose initiatives in the field have made a remarkable contribution to Canada’s international influence. The Commission has also pursued activities related to reconciliation between Indigenous and non-Indigenous peoples, especially through its popular film screenings and discussions initiative in libraries across the country.
6 “THE CANADA COUNCIL’S WORK AND INVESTMENTS CONTRIBUTE TO A TRAJECTORY FOR THE ARTS SECTOR.”
Simon Brault
7 Message from the Director and CEO
In the second year of the Canada Council for the Arts’ five-year Over such a short period of time, this overall investment represents strategic plan, Shaping a New Future, our New Funding Model came the largest public investment in Canada towards accelerating the into operation. professional arts sector’s engagement with diversity. This investment is meant to increase the sector’s potential for innovation and creation, In this same year, the Council received the second instalment towards and widen the reach of its achievements to Canadians. the progressive doubling of its budget—and our annual contribution to the arts rose to $218.9 million accordingly. With this, our strategic As we continue to support progress in the arts sector, we have also commitments are taking shape. taken note of growing public conversations around diversity, inclusion, gender equality (with particular attention to gender parity) and This year, we achieved a split of 57.5% to 42.5% between core and gender diversity, the rejection of sexual harassment and misconduct, project funding—and we’re aiming to achieve a 50/50 split by 2020-21. the predominance of corporate giants in the digital sector, and the Our investments in support of Indigenous artists and arts organizations cultural appropriation. As these conversations came to the fore this more than doubled, in keeping with our commitment to triple this year, we clearly and firmly articulated our position with regards to support by 2021. Our investment in the international exposure of both sexual harassment and misconduct, and the appropriation of Canadian artists and works has already doubled, even though we only Indigenous cultures. We also began to revise our grant-awarding expected to achieve this goal in 2020-21. We also strengthened policies and processes to fairly and effectively address any Canada’s international arts leadership in various ways, including by problematic situations that could arise with grant recipients. organizing the first Americas Cultural Summit (2018), by being the principal funder for the official Canadian representation at the 2018 In addition, we continued to develop our capacity to better guide and Venice Biennale in Architecture (where this participation was directed support the artists, groups and organizations that seek our support in for the first time by Indigenous architects and designers), and by pursuit of their various projects and mandates. To do so, we drew on working to help Canada shine at the 2020 Frankfurt Book Fair. the talents, areas of expertise and passion found within our internal teams, while also upgrading our IT systems and implementing In terms of equity and accessibility, a comparison of figures for the solutions for greater efficacy. We also welcomed Carolyn Warren, our latest financial year with those for 2015-16 (the year prior to the new Director General of Arts Granting Programs, who swiftly devoted progressive doubling of our budget) indicates that our funding to herself to operations in this large division at the Council—a division artists and organizations from culturally diverse communities or that is in daily contact with the arts community across the country. I operating in the Deaf and disability arts field has doubled, while our would also like to pay tribute to her predecessor, Jacques Vézina, the grants to artists and organizations from official-language minority principal architect of the Council’s New Funding Model. communities have increased by 50%. We are also slightly ahead in terms of our objective to have 25% of our new funding go to The Council’s work and investments contribute to a trajectory for the first-time Council recipients. In addition, around two-thirds of the arts sector in Canada—and this trajectory runs parallel to the organizations supported by the Council this year received an increase development of a society in which all peoples can benefit from the in their core grants. Through our Digital Strategy Fund we also powers of inclusion, expression and emancipation that are inherent in distributed a total of $6 million to support the arts community in its the arts and culture. digital transition and we’ve added $4 million to the 2018-19 budget of this fund for projects likely to produce significant results.
Simon Brault, O.C., O.Q. Director and CEO
8 MANAGEMENT’S DISCUSSION AND ANALYSIS
OUR COMMITMENTS
Shaping a New Future, the Canada Council for the Arts’ Strategic plan 2016-21, outlines four commitments:
1 2 3 4
Arts Support Digital Indigenous International
Increase support Amplify the quality, Renew the relationship Raise the international to artists, collectives scale and sharing of between Indigenous profile of Canadian and organizations Canadian arts through artists, and Indigenous art and artists. striving for artistic digital technology. and non-Indigenous excellence and audiences, for greater engagement a shared future. in the arts by an increasingly diverse public.
The Council will also continue to deepen its longstanding commitment to equity and inclusion, including for next generation artists and audiences.
9 MAKING PROGRESS ON STRATEGIC FUNDING COMMITMENTS
In 2016, the Government of Canada committed to doubling the Council’s budget over the next five years. Of the additional $550M the Council will receive between 2016 and 2021, it will invest $487M (or 88.5%) directly into the arts sector. The Council has committed to reinvesting this money in ways that will maximize its impact on the arts and their presence in the lives of Canadians. Here is the progress the Council has made with its funding commitments so far.
$550M additional investment over 5 years
21% or $115M received
As of 2017-18 the Council has received 21% of $550M the new investment (or $115M of $550M) total investment 2016-21
$487M additional investment to the arts sector
$100.8M invested
2017-18 target: $102M or $487M 88.5% of the $115M received total cumulative investment by 2020-21
2X to support international activities
$20.7M in 2017-18
$10M $20M 2015-16 baseline targeted annual investment by 2020-21
10 3X to support Indigenous creation
$13.1M in 2017-18
$6.3M $18.9M 2015-16 baseline targeted annual investment by 2020-21
25% of new funds to first-time recipients
$38.1M invested
2017-18 target: $28.8M $137.5M or 25% of the $115M received targeted cumulative investment by 2020-21
$88.5M to a digital fund
$6.0M invested
$88.5M 2017-18 target: $10M targeted cumulative investment by 2020-21
50% / 50% split between project and core funding in 2017-18
42.5% project funding 57.5% core funding 36% / 64% 50% / 50% 2015-16 baseline by 2020-21
11 1,898 ARTS ORGANIZATIONS RECEIVED $158.3M IN FUNDING, OF WHICH 287 WERE FIRST-TIME RECIPIENTS AWARDED A TOTAL OF $8.8M
346 2,305 GROUPS RECEIVED $8.3M ARTISTS RECEIVED $40.5M IN FUNDING, OF WHICH IN FUNDING, OF WHICH 199 WERE FIRST-TIME 801 WERE FIRST-TIME RECIPIENTS AWARDED A RECIPIENTS AWARDED A TOTAL OF $3.6M TOTAL OF $10.4M
17,553 1,909 CREATORS RECEIVED PUBLIC COMMUNITIES ACROSS LENDING RIGHT PAYMENTS CANADA IN WHICH TOTALING $9.8M GRANTS, PRIZES AND PAYMENTS WERE AWARDED
664 ARTISTS AND ARTS PROFESSIONALS SERVED AS PEER ASSESSORS
12
12 HIGHLIGHTS
THE LAUNCH OF THE NEW FUNDING MODEL
In June 2017, the Canada Council opened its online portal for artists, groups and organizations to apply to its New Funding Model programs: six new outcome-oriented programs that replaced more than 140 artistic disciplinary- based programs. Alongside these new programs, the Council also launched new strategic funds, including the Digital Strategy Fund.
CREATING, KNOWING AND SHARING
With the launch of the New Funding Model, the Council also launched Creating, Knowing and Sharing: The Arts and Cultures of First Nations, Inuit and Métis Peoples. This program acknowledges the cultural sovereignty of Indigenous peoples and respects the concept of First Nations, Inuit and Métis self-determination.
13 TOWARDS THE PROGRESSIVE DOUBLING OF THE COUNCIL’S BUDGET
Between 2016 and 2021, the Council’s direct annual investment in the arts will increase from $150 million to $310 million. 2017-18 marked the second year in this progressive doubling of the budget, during which the Council invested $218.9M in the arts.
NEW CHAPTER
In 2017, Canada marked its sesquicentennial. For this occasion, the Council created its New Chapter program (2016-17), a one-year initiative that funded the creation and sharing of 200 exceptional artistic and literary works to provide a lasting legacy for Canadians. This year, Canadians across the country enjoyed the results of many of these projects.
On the occasion of the 150th anniversary, the Council toured the exhibition Punctured Landscape to the Art Museum of the Americas in Washington D.C. It also supported the publication of The Roots of Culture, the Power of Arts: The First Sixty Years of the Canada Council for the Arts by Monica Gattinger, a book which recounts the history of the Council on its 60th anniversary and details its contribution to the development of the arts in Canada.
14 AN EVOLVING ENVIRONMENT
The Canada Council analyses the wider environment—in terms of evolving public discourse, emerging ideas, and possible future challenges. In turn, the Council is better able to understand its activities, their impact, and potential changes it may need to make in order to achieve its goals.
This past year involved many important moments for the arts, Canada, and the wider global community—especially in the areas of the Council’s strategic commitments.
Support to the Arts Digital Indigenous In September 2017, the Rapid technological On Canada’s 150th Minister of Canadian change continued to pose anniversary, some Heritage, the Honourable both challenges and Indigenous peoples called Mélanie Joly, announced opportunities for the arts for a boycott of related Creative Canada, a policy sector, as it did for many celebrations while others framework meant to guide other industries, and wider used this moment as an the Government of Canada society. Of particular note, opportunity to raise towards the modernization a public discussion emerged awareness among non- of its cultural programs, around the threats posed to Indigenous peoples—in policies, institutions and individual privacy, journal- Canada and around the legislation in light of istic integrity, and wider world—about Indigenous digital realities. democracy by social media histories, cultures and and other digital platforms. ways of life. In this same year, the National Inquiry into Missing and Murdered Indigenous Women continued its work to examine and report on, International Equity “the systemic causes This past year, several The movements #MeToo behind the violence that Western leaders articulated and Time’s Up engaged Indigenous women and plans to strengthen borders governments, media and girls experience, and their against the movement of wider society in a conver- greater vulnerability to both people and goods. sation around sexual violence.” Related to this, Canada harassment and assault. engaged in the ongoing These movements have renegotiation of the North drawn greater attention to American Free Trade gender inequalities—and Agreement (NAFTA) with the Government of the United States and Canada released its 2018 Mexico. budget with a gender- based analysis and several gender-related measures.
15 RESULTS FOR CANADIANS
The Canada Council invests in the creation, production and dissemination of arts and literature and fosters excellence and diversity in artistic practice. This investment encourages Canadians to appreciate, participate in, and engage with the arts.
A look at Canadians’ engagement with the arts in 2016 reveals1:
• 87% of Canadians • 53% of Canadians • 7 out of 10 Canadians attended a perfor- have been personally believe the arts and mance or arts event. involved in an arts culture are important activity—such as to their quality of life. • 2 out of 3 Canadians singing, dancing, engaged in some visual art or creative • 62% of Canadians way with arts and writing. believe the arts make culture in an online their communities a environment. better place to live.
The Canada Council’s investment in the arts is also an investment in the economy and jobs:
• There were 652,406 • The culture Gross • Canada exported cultural jobs in 2016, Domestic Product $16 billion in culture or 3.5% of total jobs. was $53.8 billion in products in 2016—or 2016, or 2,5% of 2.5% of total economy Canada’s total GDP. exports and almost 30% of culture GDP.
1 Data taken from the Arts and Heritage Access and Availability Survey, 2016-17; and from the Provincial and Territorial Culture Indicators (PTCI), which are derived directly from the Canadian Culture Satellite Account (CSA), an accounting framework developed to measure the economic importance of culture, the arts, heritage, and sport to the Canadian economy.
16 COMMITMENT INCREASED ARTS SUPPORT
We will invest in artistic research and development, and help next generation artists to build sustainable careers. We will increase support to artists, collectives and organizations striving for artistic excellence and greater engagement in the arts by an increasingly diverse public.
Increased Support In terms of increases to core In terms of increases to The Public Lending funding (grants that have project funding: Right Program With the launch of its New multiple payments and cover a • Project funding totaled $87M Funding Model, the Council broad array of expenditures): in 2017-18. The Public Lending Right made many notable increases • 111 organizations received • The Council is aiming to shift (PLR) Program administers in its support to the arts: core funding for the first the share of core and project yearly payments to creators • Overall funding to first-time time, totaling $5.5M in funding to a 50/50 split by whose works are in Canada’s recipients totaled $22.8M in 2017-18. These recipients 2020-21. In 2017-18, the split public libraries. In 2017-18, the 2017-18. represent 10% of all 1,129 is 57.5% to 42.5% compared Council launched a new organizations that received website for the PLR Program • Overall funding increased to 64% to 36% in 2015-16, core funding. and announced a progressive from $196.8M in 2016-17 to which represents an additional investment of $218.9M in 2017-18—an • 1,129 organizations in total important move towards $5 million in new funds to increase of 11%. received core funding, the Council’s goal. totaling $117.4M in 2017-18. the creator payment budget This compares to a total of by 2020. $91.7M in core funding in 2016-17, for an increase in core funding of 28%. Photo: Tom Quirk Tom Photo:
Neighbourhood Sketchbook Project by Gallery Gachet
17 Neighbourhood Sketchbook Project features hand-bound and art-filled sketchbooks from members of ten Downtown Eastside organizations in Vancouver. Each sketchbook tells the story of the person who created it—the pages resonating with the joy, wisdom, and resilience of its artist and of their community. The project was presented in March 2018.
Increased access, increased funding
The Canada Council for the Arts has made a commitment to artist Susan Abbott, envisages the use of drawing, painting, increase funding for the arts through additional support on a sculpture, and video to address the multi-faceted impacts of number of fronts—experimentation, next generation artists mental illness—direct or indirect—on people. Her project will and organizations, organizational capacity, and engagement take shape during residencies in Ontario and Manitoba. She is with the arts by an ever more diverse public. This year, artists pursuing this project with her first Council grant. and arts organizations awarded grants from the Council for the first time collectively received $22.8 million. Mile Zero Dance (MZD) wants to make dance accessible to everyone. Their multidisciplinary vision of dance inspires Gachet Gallery, an artist-run centre in Vancouver’s Downtown them to collaborate with artists in other disciplines such as Eastside, makes a real social impact through its mobile gallery, music, cinema, theatre, and visual arts. As a thriving cultural multimedia presence, residencies, exhibitions, and other hub in Edmonton, Alberta, MZD regularly hosts artists-in- activities. In particular, the gallery offers space to residence. It also maintains solid ties with the community as marginalized artists or artists with mental illness, who are well as with Indigenous artists who regularly participate in often systematically excluded from the mainstream. The its performances. MZD received a multi-year grant from gallery undertakes awareness-raising work based on the Council. collaboration and dialogue. They received a multi-year grant from the Council. Increased Council funding gives a steadily growing number of Canadians access to artistic projects that embody and Booby Hatch (Wo)manifesto: A Feminine Perspective of reflect their rich diversity. Century Manor, a multimedia project proposed by Manitoban
18 Quirk Tom Photo: COMMITMENT DIGITAL
We will amplify the quality, scale and sharing of art through digital technology, which is changing the way we relate to the arts and culture, and how we connect with each other and the world. Artists and arts organizations need to be able to thrive in this radically changing environment.
Launch of the Digital Digital Gatherings and incubate potential Strategy Fund projects. This year’s gatherings Building on the momentum of were partnerships with the Ontario Arts Council, the In August 2017, the Council last year’s Arts in a Digital Saskatchewan Arts Board, and launched its Digital Strategy World Summit, in 2017-18 the the Government of Yukon Fund. The Fund supports Council began to host a series Department of Tourism and Canadian artists, groups of gatherings across Canada Culture. The Council also and arts organizations in that will bring together artists continued to plan digital understanding the digital and arts professionals with gatherings to take place in cities, world, engaging with it, and digital experts to consider provinces, and territories responding to the cultural and current digital realities as an across Canada in 2018-19. social changes it produces. opportunity to develop Between 2017 and 2021, the innovative approaches, Council will invest $88.5M re-imagine how artists and through this Fund. arts organizations engage with citizens, and seed collaborations within the arts In 2017-18, the Council community and with other awarded $6M in support to sectors. The gatherings also artists, artistic groups, and provide an opportunity for organizations through 45 grants those working in the arts to towards the development of share knowledge, mobilize, digital initiatives that aim at fostering a user-centred culture of innovation, a rethinking of organizational culture, work procedures and leadership styles, and the adoption and deployment of available technological solutions.
19 The digital shift continues…
While the Canada Council for the Arts’ 2016-17 fiscal year ended with the mobilization of participants at the Arts in a Digital World Summit, the digital shift that everyone anticipated at the Summit truly began in 2017-18. In fall 2017, the first Digital Strategy Fund competition was launched, giving the arts community the financial support to seize opportunities presented by digital realities and boldly pursue innovative trajectories.
The Ottawa-based IN:DIG:BRIDGE, (Indigenous Digital Bridge) project, conceived by Monique Manatch, Executive Director of Indigenous Culture and Media Innovations (an artist-run multi-arts organization), features multi-sectoral collaboration among Indigenous Elders and artists, digital strategists from the P2P Foundation, and a partnership with Carleton University’s Digital Humanities Summer Institute. The goal of the project is to develop an Indigenous digital arts strategy in harmony with traditional Indigenous values and knowledge as it takes inspiration from the traditional Indigenous medicine wheel, which follows the seasons in a creative one-year cycle.
The Centre for Art Tapes (in Halifax, Nova Scotia) joined forces with the Film and Video Arts Association of Alberta to create a mobile app for artists and arts organizations that helps them connect with each other and with their audiences via social networks and an interactive map. The app allows online users to post and share digital works such as panoramic videos, or audio- or video-guided tours designed for dissemination on a website.
The Regroupement des éditeurs franco-canadiens created a project to digitally disseminate literary works by francophone writers outside Quebec to Canada’s Francophone elementary and high schools. An annual online subscription gives subscribers access to digital books via streaming. By enabling content to be accessed from computers or smartphones, the project reaches today’s young readers on the platforms they regularly use. This innovation will significantly improve the reader experience for school-age students and make access to literary works much easier.
Digital realities have reconfigured how we relate to one another—they rely on collaboration and reach out to users. The second Digital Strategy Fund competition will accept a new wave of proposals beginning in fall 2018.
A participant testing a virtual reality headset at the Council’s Arts in the Digital World Summit.
20 Perception. Pure Photo: COMMITMENT INDIGENOUS
We commit to supporting the renewal of the relationship between Indigenous artists, and Indigenous and non-Indigenous audiences, for a shared future.
Creating, Knowing Taking a Stand the publication of a position and Sharing against Appropriation paper on the Council’s website, which explains that With its New Funding Model, In September 2017, the Council when artists and organizations the Council also launched published op-eds in both Le seek Council grants for its Creating Knowing and Devoir and The Globe and Mail projects that address, deal Sharing: The Arts and Culture against the appropriation of with, incorporate, comment of First Nations, Inuit and Indigenous cultures in the arts. on, interpret or depict Métis Peoples program. In Through the op-eds, the distinctive aspects of First the first year of this program, Council articulated a strong Nations, Inuit or Métis culture, the Council reached 209 artists, leadership position on this they must demonstrate groups, and arts organizations issue and stated it “recognizes genuine respect and regard with $9.4M in grants—of which that both the traditional and for Indigenous art and culture 40% (or 84) of these recipients contemporary cultural and in their artistic process. received a grant for the first artistic practices of Indigenous time. Beyond the Creating, peoples are their property, as Knowing and Sharing program, spelled out in the United the Council’s overall funding Nations Declaration on the to Indigenous artists and arts Rights of Indigenous Peoples.” organizations totaled $13.1M in These op-eds coincided with 2017-18—a 12% increase from the overall amount of $11.7M in 2016-17, and has more than doubled since 2015-16.
The Raven, 2018. Theresa Vander Meer-Chasse and Nicole Baumgartner took the crow as their theme in designing works created from tires found along the highway between the Yukon and Alaska. They plan to exhibit these
works on completing the project. Meer-Chasse Vander Theresa Photo:
2121 Jeanette Kotowhich in Salmon Girl, a story about our relationship to the natural world told through theatre, dance, music and puppetry. This visually stunning work presented by Young People’s Theatre in Toronto offers an Indigenous view of how we share the world with all living things. It was performed in May 2018.
Indigenous art: awarding grants in a spirit of cultural self-determination
The Canada Council for the Arts is committed to a renewed Teresa Vander Meer-Chasse and Nicole Bauberger drew on relationship between Indigenous artists and both Indigenous their range of both Indigenous and non-Indigenous and non-Indigenous audiences for a shared future. When the experiences to create Scavengers Are We: an exhibition and discussion around cultural appropriation was at its height in collaboration opportunity. The two Whitehorse artists took May 2017, the Council issued a statement on the importance the crow as the theme in designing works created from tires of supporting Indigenous art in a spirit of cultural self- found along the highway between the Yukon and Alaska. This determination and opposing cultural appropriation. In this unusual encounter of theme and material generates a way, the Council is pursuing reconciliation and decolonization number of different ideas, particularly about respect for the —activities at the heart of its strategic plan. animal world and recycling. In 2018, this exhibition will tour in the Yukon, and then to various Canadian cities. Artists and arts organizations are now working towards reconciliation and decolonization—and this vision of a Raven Spirit Dance, a Vancouver-based dance company that common future—in their own remarkably concrete ways. is connected to the Yukon through its projects, pursues a contemporary dance practice grounded in both traditional Ludovic Boney presented NSPSLL ! (Ne Sautez Pas Sur Les Lits ! and contemporary views of the Indigenous world. The – Don’t jump on the beds!), an immersive installation that company’s works, which draw not only on dance, but also on awakens the senses and disrupts common perceptions. The theatre, puppets and multimedia, and which have been installation, consisting of a veritable thicket of different presented both nationally and internationally, create objects connected by wires and featuring mattresses on the remarkable platforms for telling Indigenous stories and floor, encourages spectators to do quite the opposite of ‘not stimulating dialogue. As an active community member, Raven jumping on the beds’: their passage through the installation Spirit also offers classes to encourage audience participation activates mechanisms, triggers noises, and sets objects in and engagement. In 2017, Raven Spirit received its first major motion. The installation, which is on display at the Action Art multi-year grant from the Council. Actuel centre, in Saint-Jean-sur-Richelieu, Quebec until April 2018, takes spectators on a journey between the forbidden In this first year of the New Funding Model, funding to and the permissible—between fantasy and reality. Ludovic Indigenous artists and arts organizations has more than Boney recently received his first Council grant. doubled since 2016-17, and the Council is committed to tripling its investment by 2020-21.
22 Erik Zennstrom Photo: COMMITMENT INTERNATIONAL
We will raise the international profile of Canadian artists and arts organizations, giving them the opportunity to share the best of the arts created in Canada with global audiences. With the help of partners here and abroad, we will help grow Canada’s international presence and complement the efforts of other public funders to support Canadian artists abroad. We will also foster reciprocity by welcoming international artists to Canada, and by supporting bilateral and multilateral co-productions and artistic residencies.
Americas Cultural Summit, a Agencies (IFACCA) board gathering of public arts and meetings in Argentina and in International culture funders from across Malaysia. With arts council Frankfurt 2020 Support the Americas (May 2018) to and culture ministry members In 2020, Canada will be the reimagine and advance the in over 70 countries, IFACCA In 2017-18, the Council Guest of Honour at the rise of cultural citizenship. is a valuable global network directed $20.7M in support to Frankfurt Book Fair—the and platform for the Council international activities. This largest global marketplace for to share expertise, resources, included $12.8M in grants to publishers, retailers, librarians, and innovative practices in 1,157 artists, groups and arts editors and authors. For this arts research and financing, organizations through the occasion, the Council has advance reciprocity, and Arts Abroad program. partnered with Canadian increase its influence over The Council’s Heritage in the creation of key issues and values in the Leadership in a new funding initiative to global cultural context. This support the translation of the World year, Simon Brault also Canadian literary and non- In addition to its investment in participated in the Hong literary works into German, bringing the work of Canadian Kong International Arts Collaboration for and to contribute to associated artists and arts organizations Leadership Roundtable and Canadian Arts in promotional and production to the world, the Council also attended the Venice the World costs. The initiative opened to actively promotes and Biennale in Italy. Within applications in March 2018. This year, the Council worked advances the invaluable role Canada, he also spoke at with the departments of of the arts in the international the International Society for Canadian Heritage and Global arena. This past year, the the Performing Arts (ISPA) Affairs Canada to launch a Council’s Director and CEO, Congress in Montréal. framework that commits all Simon Brault, participated in three partners to active and several important international targeted collaboration. This forums where he championed framework will, in turn, result the transformative power of in the development of new the arts vis-à-vis many global markets and international challenges. Notably, this leadership opportunities for included his attendance at the Canadian artists and creators, International Federation of support the projection of Arts Councils and Culture Canadian excellence around the world, and reinforce cultural diplomacy. This partnership has been especially important this past year in supporting the Council’s work towards hosting the first
23 Canada in the international spotlight
The Canada Council for the Arts is committed to promoting the brings together 2,000 performers on 35 stages for over work and creations of Canadian artists on the international stage 120,000 festival-goers. At the festival, Doyle and Bunston in order to broaden their audiences and develop new markets performed six unique shows ranging from children’s music to for their work, and to share the best of Canada with the world. chanting—demonstrating the breadth of their practice to new audiences Down Under. This past year, for example, the Council supported Montréal’s ECM+ (Ensemble contemporain de Montréal)—an ensemble The Council’s international support also reaches many which produces multidisciplinary concerts and showcases individual artists. This past year, for example, Sameer Farooq Canadian musical creation. With funding from the Council, received support from the Council for his project Terma. For ECM+ will produce and tour their show, Hockey Noir, the this project, Farooq will collaborate with Nevada-based poet Opera, to cities in Canada, the United States and Europe. Jared Stanley to build an imaginary museum that bridges Presented in the film-noir style of the 1950s with graphic novel two distinct regions: Cape Breton Island—the artist’s birthplace visuals, Hockey Noir centers on the classic hockey rivalry —and the Great Basin Desert in Nevada. The project will between Toronto and Montréal—with an extra dash of culminate in an exhibition at the University Galleries at the organized-crime drama. With this tour, ECM+ will build the University of Nevada Reno and will also travel to the Art appetite of international audiences for Canadian contemporary Gallery of Cape Breton University. music while also connecting them with Canada’s beloved national sport. These recipients exemplify how the Council’s support helps develop the creative capacity of Canadian artists and arts With a grant from the Council, mother and son duo Teresa organizations, offers Canadian audiences the opportunity to Doyle and Patrick Bunston of Prince Edward Island travelled experience international artists, and, ultimately, builds connec- to Queensland Australia to perform at the Woodford Folk tions between Canada and communities around the world. Festival. The Festival—which has previously programmed artists from PEI towards developing an Australian following—
Created by the Ensemble Contemporain de Montréal, and conducted by Véronique Lacroix, Hockey Noir, the Opera is a multimedia chamber opera that takes its inspiration from hockey and film noir as it combines music, video, and comic strips. They performed the opera in Canada in May 2018 and have plans for an international tour later in the year.
24 Maxime Boisvert Photo: COMMITMENT AN ONGOING FOCUS ON EQUITY AND INCLUSION
In addition to the four commitments in the Strategic Plan, the Canada Council will continue to deepen its longstanding commitment to equity and inclusion, including for next generation artists and audiences.
transformation in their own Arts Centre (NAC), which Cultural Human Resources cities and communities. This will support professional Council, which supports A Global Forum was the first year Canada has development in composition for workers and employers to Welcomes Canada’s been represented at the YCI. Canadian orchestras. During build better workplace Young Cultural their residency, the composers environments within the Innovators will work with and be mentored cultural sector. This by music director Alexander contribution—along with an In October 2017, the Canada Shelley, the NAC Orchestra additional $252,000 from the Council announced that it had Partnerships for a musicians, and administration, Department of Canadian selected five individuals to More Diverse Sector and will have access to its Heritage—will be used to represent Canada at the creative production and support a series of initiatives Salzburg Global Forum for The Council holds several performance environment. to equip the cultural sector Young Cultural Innovators (YCI). partnerships which seek to with the tools, practices and Each year, the YCI Forum brings deepen its commitment to training to build and maintain together over 50 individuals equity. In May 2017, for example, respectful workplaces. These from varying geographic and the Council announced the new tools and resources will cultural backgrounds with the first two recipients of the Healthy, Respectful be made available to over goal of developing their Carrefour residency for and Harassment-Free 1,750 arts organizations practical skills, reflecting on emerging, culturally diverse or Work Environments across Canada. their leadership, building their Indigenous composers. This in the Arts networks on a global scale, new residency is part of a and developing strategies for 5-year partnership between This past year, the Council innovation and social the Council and the National contributed $300,000 to the
Equity and Inclusion in the New Funding Model
In 2017-18, the Council provided the following support to its designated In addition, in 2017-18 the Council’s support by gender was priority groups: as follows:
Distinct Amount awarded Distinct Amount awarded recipients (In thousands) recipients (In thousands)
Indigenous 287 $13,097 Support to women 1,093 $18,007 Culturally Diverse 667 $20,682 Support to men 888 $16,453 Deaf and Disability 192 $4,721 Support to transgender Official Language Minority1 and other 44 $951 Community – Anglophone 274 $8,636 Total 2,025 $35,411 Official Language Minority1 Community - Francophone 161 $6,194
These tables are based solely on data from recipients who provided information through the Council’s self-identification forms and/or its online granting portal.
1. Support for artists, groups, and arts organizations working in official-language minority communities is calculated using data collected in a different way than data collected for the other three designated priority groups. Any comparison between these groups is, therefore, not necessarily recommended. 25
An arts milieu that engages everyone
The Canada Council for the Arts is committed to deepening the initially created works in Montréal, while also preparing its longstanding commitment to equity, inclusion and official for a possible international tour. languages, and to creating opportunities for youth. Related to this, the Council’s New Funding Model is designed to be more Artist Lou Sheppard of Halifax, Nova Scotia, translated aspects flexible and inclusive. In turn, grant recipients reflect the many of the Diagnostic and Statistical Manual of Mental Disorders’ communities across Canada—including artists who are (DSM) diagnostic criteria for gender dysphoria into a series culturally diverse, Deaf, have a disability, and/or who belong of shapes and choreography for a dancer. This work, which to official-language minority communities. Sheppard plans to record and turn into a video installation, emphasizes the historical connections between mental Amanda Richer, a Deaf actor based in Cambridge, Ontario, is health, gender and sexuality within the field of psychiatry. writing a film script for a feature film titledSound Within. The film will centre on a Deaf woman and the challenges she faces The Galerie d’Art Louise-et-Reuben-Cohen at the University in the legal and prison systems after she fatally shoots her of Moncton in New Brunswick presents a yearly program of abusive husband. Richer hopes the film will inspire Deaf artists contemporary art exhibitions, guided tours, creation to create their own work where their stories are shared, while activities, films, conferences and artist performances. Since also drawing attention to the ways in which Deaf people are the 1960s, the Galerie has been an important element in the impacted by abuse and marginalized by the law. Acadian renaissance—serving both the local official-language minority community, and reaching audiences around the Montréal’s Corpuscule Danse is driven by a mandate to world. promote integrated dance, a practice that unites dance artists with and without disabilities. Over the next two years, they By funding artists and arts organizations that reflect the true will further develop their Quadriptyque project—which was diversity of Canada, the Council seeks to build an arts milieu initiated in 2016 as a means of introducing four new that engages everyone. choreographers to integrated dance practice—and remount
France Geoffroy, Roya Hosini and Georges-Nicolas Tremblay inQuadriptyque . France Geoffroy is the Artistic Director of Corpuscule Danse, based in Montréal, and a pioneer of integrated dance in Canada. In 2018, she was awarded the Michael J. Fox Prize for her work in Deaf and Disability Arts.
26 Photo: Marie-Hélène Bellavance Photo: THE ART BANK EVEN MORE ART FOR EVERYONE!
The Canada Council Art Bank is the largest collection of contemporary Canadian art in the world. The primary role of the Bank is to rent these artworks to organizations with a view to continually expanding the exposure of Canadian art and enabling as many Canadians as possible to enjoy them. Thanks to many new clients in both the private and public sectors, the Bank’s revenues have jumped by more than 10 per cent. Two of the most high-profile new clients are Natural Resources Canada and the National Film Board.
Jimy Sloan, Juicy (2017), acrylic on canvas
NEW WORKS!
Katharine Harvey, The Catch (2017), acrylic on canvas on board The Art Bank took advantage of its presence at Art Toronto, an international fair for modern and contemporary art, by publicizing its programs and works and acquiring works by five emerging or mid-career artists not yet featured in its collection: Katharine Harvey, Laurent Lamarche, Judy D. Shane, Jimy Sloan, and Kelly Wallace. The new acquisitions are in great demand and three of them have, in fact, been rented to clients in Ottawa and Toronto.
27 THE ART BANK ABROAD
Punctured Landscape, the exhibition initially presented in the Council’s Âjagemô space, traveled to the Art Museum of the Americas (AMA) in Washington D.C. from April 27 to July 30, 2017 for what turned out to be that institution’s largest exhibition of Canadian works in its history. The Art Laurent Lamarche, Fossile Pétri 10 (2017), engraved plexiglass, aluminium, Bank also subsequently donated 150 works to the LED lighting AMA in August 2017; each of the donated works is a copy of a work that remains in the Art Bank collection. These works by 99 artists from across the country are the first works from Canada to become part of the AMA’s permanent collection.
ART MADE ACCESSIBLE TO EVERYONE
Judy D. Shane, The Painted Photograph: Remnants, Remnant #475 v1 (2017), inkjet print In a sense the Canada Council Art Bank belongs to everyone. In the spirit of this idea, the Bank welcomed the general public at no charge to view its works during Doors Open Ottawa in 2017. The event was an enormous success, with more than 1,000 visitors coming to admire the collection.
In 2017-18, the Art Bank continued to raise its profile both within Canada and abroad. It was a successful year, with even more art for everyone!
Kelly Wallace, Turning Squares (2016), pencil drawing on paper
28 THE CANADIAN COMMISSION FOR UNESCO THE COMMISSION’S COMMITMENTS
As the primary promoter of UNESCO values in Canada, the Canadian Commission for UNESCO (CCUNESCO) mobilizes its extensive networks and many partners to take action along three major themes: building inclusive communities, protecting heritage and the biosphere, and encouraging innovation. CCUNESCO operates within the Canada Council for the Arts. The renewed importance and relevance of the joint presence of the Council and CCUNESCO in the field, combined with the impact of their often-convergent activities and initiatives, make a real contribution to a future of peace, equity, and sustainable development for all.
The Commission’s work in 2017-18 was exceptional for the number of partnership projects carried out, and the number of new entities officially registered in UNESCO programmes and designations in Canada. The new CCUNESCO website provides detailed information about the Commission’s objectives and showcases the activities of its networks and partners.
Encouraging the and panel discussions that to libraries that would like to Reconciliation Efforts were open to the public. The organize a screening-and- event generated fruitful discussion event. Over of Private Citizens exchanges about the issues 30 libraries from across that Indigenous peoples face Canada have already To help all Canadians pursue around the world. The expressed interest in reconciliation, CCUNESCO has gathering concluded with a participating in this project launched many initiatives with musical celebration that that will run until 2021. The various partners. featured Indigenous drumming, Commission created this dancing and singing. initiative in partnership with For example, it partnered with the National Centre for Truth an international event organized The goal of the Commission’s and Reconciliation, Library by the Assembly of First Let’s Talk about Reconciliation and Archives Canada, the Nations Quebec-Labrador to initiative is to make non- Canadian Federation of Library celebrate the 10th anniversary Indigenous people more Associations’ Indigenous Matters of the historic adoption of the aware of Indigenous rights, Committee, the National Film UN Declaration on the Rights aspirations, histories, and Board of Canada, Wapikoni of Indigenous Peoples. During cultures by attending Mobile, and Canada’s national two days of activities in screenings of films by network of public libraries. Montréal in September 2017, Indigenous artists. More than many Indigenous representa- 280 films have been offered tives participated in a conference
29 The Buffalo Hat Singers, 10th anniversary of the United Nations Declaration on the Rights of Indigenous Peoples, Montréal, September 2017. Photo: Sylvain Légaré Légaré Sylvain Photo:
Creation of the entries officially included in signed with the communities • Images of Quebec City and Canada Memory of the international Memory of of the Northwest Coast of the surrounding area (1860 the World Register, the new British North America. to 1965): Photo archives of the World Register Canadian Register showcases the J. E. Livernois Ltée fonds • The Canadian Pacific six sets of documents that are —four generations of the In 2017, three sets of Canadian Railway Company Fonds significant for Canadian Livernois family have left us documents that contribute to —these archives document history, culture, and society: these photographic portraits humanity’s heritage were the building of the Canadian and stories. added to the four already Pacific Railway and, in a • The Ida Halpern Fonds—a included in the international sense, of Canada itself. • The Scrapbook Debates remarkable collection of Memory of the World Register. —these newspaper clippings Indigenous songs, ceremonies, • Witnesses of Founding This year, CCUNESCO also are the only record of the and culture of the peoples of Cultures: Early Books in launched the Canada Memory debates in Canada’s Canada’s Northwest Coast. Aboriginal Languages Parliament during the years of the World Register to (1556-1900)—this collection • The Vancouver Island immediately following complement its international of 146 early books in several Treaties—previously known Confederation. counterparts with important Indigenous languages is a as the Douglas Treaties, these documents of specifically unique reflection of First are the only treaties from the Canadian relevance. In Nations’ linguistic heritage. addition to the Canadian colonial era to have been
AWARENESS CAMPAIGNS AND EVENTS
CCUNESCO mobilizes its networks and partners to make Canadians more aware of the issues that fall within its mandate. This year, the Commission organized several major campaigns that reached millions of people via online social networks: #ItStartsWithMe, to involve everyone in the effort to combat racial discrimination; #WhatIfIWasWrong, to encourage young people to question overly premature ideological convictions and pre-empt radicalization; #MotherTongue, to protect endangered languages, especially Indigenous ones, and; #GirlsInScience and #WomenInScience, to encourage females to pursue careers in STEM (science, technology, engineering and mathematics).
* A detailed report of the Canadian Commission for UNESCO’s activities is available on ccunesco.ca as well as on canadacouncil.ca.
30 FINANCIAL OVERVIEW
31 HIGHLIGHTS
2017-18 marked the second year of the progressive doubling of the The costs of transfer program delivery totaled $19.8 million for the Council’s budget, originally announced in Budget 2016. This year, an year ending March 31, 2018, $3.5 million below the budgeted amount. additional $35 million was included in Council’s Parliamentary This was due to under spending of $1.7 million in peer costs and also appropriations, on top of the $40 million increase in ongoing funding savings in salaries and benefits totaling $0.9 million due to staffing provided in 2016-17. Cumulatively, over the two years since the start delays. of the progressive doubling of the Council’s appropriation, 87.7% of new funding has been directly injected into the arts sector. The overall increase of $2.9 million in transfer program delivery costs compared to last year is directly related to the number of new In 2017-18, the Council launched its New Funding Model, shifting from positions that were projected with the new funding to deliver on the 140 disciplinary-based programs to six new outcome-oriented Council’s commitments. granting programs, in addition to strategic funds, such as the Digital Strategy Fund. General administrative expenses were $2.8 million more than the previous year, and slightly over budget by $0.5 million due to higher Summary Statement of Operations for the Years Ended March 31 professional services and information management costs required to Budget Actual Actual invest in the modernization of the Council’s legacy systems. They (in thousands of dollars) 2018 2018 2017 represent, nevertheless, 7% of total expenses, the same as in 2016-17. Total revenue and .Summary Financial Position as at March 31 Parliamentary appropriations $ 269,125 $ 312,001 $ 239,237 (in thousands of dollars) 2018 2017 Total expenses 269,109 262,742 234,394 Total financial assets $ 431,745 $ 396,537 Surplus from operations $ 16 $ 49,259 $ 4,843 Total liabilities 136,204 121,398 Net financial assets 295,541 275,139 For the year ended March 31, 2018, the Council is reporting a surplus Non-financial assets 28,713 27,710 from operations of $49.3 million. The current surplus is primarily Accumulated surplus $ 324,254 $ 302,849 attributable to a $41.6 million positive variance in net realized investment income compared to budgeted income, and savings in In 2017-18, the Endowment and Special Funds and the Killam Fund transfer program delivery expenses of $3.5 million, in addition to a had strong annual returns of 8.0% (12.1% in 2016-17) and 8.4% (12.4% carry-forward of $3.9 million in grants committed to the Digital in 2016-17) respectively. In comparison to the prior year, the Strategy Fund to 2018-19. investment portfolio has increased by $19.8 million with a fair value Budget Actual Actual of $389.4 million as at March 31, 2018. The annual results are attributable (in thousands of dollars) 2018 2018 2017 to very strong performance both in the Canadian and Global markets.
Grants and contributions $ 209,238 $ 206,364 $ 184,045 In accordance with the Council’s Statement of Investment Policies Public Lending Right program 9,688 9,775 9,774 and Goals, the $10.3 million approved budgeted amount for net realized investment income is calculated using a prescribed spending Prizes and awards 3,013 2,753 2,974 rate of 3.5% times the previous three-year average market value of $ 221,939 $ 218,892 $ 196,793 the portfolio. This year, the Council recorded $51.9 million in net Compared with $196.8 million in the previous year, total grants, realized investment income due to a significant realized gain during a author payments and prizes in 2017-18 were $218.9 million, below the transition of Global Equity managers and a high distribution of approved budget of $221.9 million, including a reinvestment of $0.9 income with the positive annual performance of its portfolio. The million from identified savings in operations. Council’s investment policy states that as a minimum any investment income above the allocated approved budget must be reinvested in Of the total budget of $10 million for the Digital Strategy Fund, $6.1 the portfolio in order to preserve capital. Therefore, this year $45.0 million was provided to 45 exciting projects, with the remaining million was transferred from accumulated surplus from operations to budget added to this innovative fund for 2018-19. New outreach the reserve for excess investment income. This consists mainly of the strategies to the arts community will increase awareness and improve $41.6 million excess in net investment income and of the $3.5 million application success rates for the Fund in 2018-19. underspent in transfer program delivery for 2017-18.
In addition to its granting programs, the Council allocated $2.8 In 2017-18, the Council updated its Corporate Risk Profile, taking into million for prizes and awards programs that recognize excellence and consideration changes in the Council’s risk environment. This innovation in Canada. It also provided payments to authors through included re-assessment of the risks and updates to the Public Lending Right program amounting to $9.8 million. potential risks to the Council as well as mitigation strategies. This revised corporate risk profile is used as a key input in strategic and operational planning, resource allocation decisions, and organizing and prioritizing management action plans.
32 FINANCIAL POSITION Asset Mix as of March 31, 2018
50 45.0 45 40.0 Financial Assets 40 35 30 As at March 31, 2018, total financial assets were $431.7 million, an 25.0 25 21.0 20 increase of $35.2 million from the previous year. Financial assets 13.0 12.5 Percentage 15 10.0 10.0 7.5 include the portfolio investments as well as cash, cash equivalents 10 7.0 4.0 5.0 and accounts receivable. 5 0 World Equity Canadian Canadian Alternatives Infrastructure Real Estate As at March 31, 2018, the fair value of the Council’s investments was Markets Equities Fixed Income $389.4 million, an increase of $19.8 million from the prior year. Actual Target The Investment Committee and senior management monitors closely The Council invests in units of pooled funds and a segregated fund the level of risk within the portfolio. The 10 year standard deviation that are managed by professional investment managers. The was at 7.3% as at March 31, 2018 compared to 6.8% for the benchmark. Council’s investments are guided by a Statement of Investment The Investment Committee reviewed its asset allocation strategies in Policies and Goals and the Board Statement of Investment Beliefs, Fall 2017 and concluded that the current allocation was the most which are both approved by the Board. The objectives of the efficient to achieve the long-term 4.5% real rate of return over the 10 portfolio are to generate a 4.5% real rate of return over a ten-year year-period. period to supplement the Parliamentary appropriations and to support the fellowships and prizes for the Killam Fund and Special The following chart shows the returns for the various asset classes Funds, while maintaining the purchasing power of the endowed for the one and four year periods ending March 31, 2018. It shows capital. The Killam Fund and Special Funds represent contributions that the portfolio’s asset mix is well diversified and the performance that have been received by way of donation and bequest and have of its other asset classes such as Real Estate and Infrastructure, helped been restricted for specific purposes by the donors. The Killam Fund the portfolio compensate for the low return in Fixed Income. is required to be maintained in a separate investment portfolio that is consolidated for reporting purposes. The Special Funds are included Annual Returns by Asset Classes with the Council’s investment portfolio; a proportionate share for 35.00% each contribution is calculated based upon the fair value of the 30.00% investment portfolio at the time each contribution is received. 25.00%
An Investment Committee composed of independent experts with 20.00% experience in both the investment field and the asset classes in which 15.00% the Council invests assists in the oversight and management of the 10.00% portfolio. Two Council Board members are also Investment Committee 5.00% members. In addition, the Council uses the services of an independent 0.00% investment consultant to assist the Investment Committee in its work. 1 Yr 4 years 1 Yr 4 years 1 Yr 4 years 1 Yr 4 years 1 Yr 4 years 1 Yr 4 years 1 Yr 4 years Total Fund Cdn Equity Global Equity Fixed Income Alternatives Real Estate Infrastructure
Fund Benchmark The Investment Committee reviews the Council’s investment policy The following chart shows the annualized portfolio returns for various annually, and, as considered necessary and appropriate, recommends periods of the Endowment and Special Funds and the Killam Fund adjustments to the asset mix and to the diversification of the portfolio against the benchmark return. It shows the strong performance of management structure or to its expenditure policy, currently set at the portfolio compared to its benchmark mostly due to the recent 3.5% times the rolling average of the market value of the fund over transitions in investment managers. The fund’s performance ranked the last three years. At each quarterly meeting during the year, the in the top quartile this year compared to its peer group. Investment Committee assessed the effect of implementation of the policy on the portfolio through regular updates from investment Annualized Portfolio Returns managers and a thorough review of the portfolio’s performance.
The following table shows the actual comparative asset mix and the 20.0% asset mix targets for the portfolio. 15.0%
10.0%
5.0% Annualized returns (%) returns Annualized
0.0% 10 yrs 5 Yrs 4 Yrs 3 Yrs 2 Yrs 1 Yr Periods Ending March 31, 2018
Endowment Fund Killam Fund Benchmark
33 Liabilities The Council’s Art Bank has the largest collection of contemporary As at March 31, 2018, total liabilities were $136.2 million, an increase Canadian art in Canada, with over 17,100 works, and rents the of $14.8 million from the previous year as shown in the table below: collection to interested public and private sector organizations. The Art Bank collection is presented under Art Bank assets which are (in thousands of dollars) 2018 2017 carried at a cost of $19.4 million on the Statement of Financial Liabilities Position as at March 31, 2018. The total appraised value of the Grant, author payments and prizes collection is estimated at $71 million as at March 31, 2018. payable $ 69,547 $ 59,354 Accounts payable and accrued The Council’s Musical Instrument Bank owns or manages 22 historically liabilities 3,782 4,609 important, fine stringed instruments and a fine cello bow, which are Deferred revenues 7,728 7,435 loaned to gifted young musicians for three-year terms. Musical instruments appear on the Council’s Statement of Financial Position Employee future benefits 3,482 3,232 at a nominal value of $1,000 as a reasonable estimate of the future Deferred revenues - Externally benefits associated with such assets cannot be made. At March 31, restricted contributions 51,665 46,768 2018, the appraised and insured value of the musical instruments was Total liabilities $ 136,204 $ 121,398 US$41.8 million.
The main increase is due to the $10.2 million increase in Grants, Accumulated Surplus author payments and prizes payable compared to last year directly related to the change in application deadlines with the New Funding Accumulated surplus consists of the following elements as at March 31: Model resulting in a much higher number of applications assessed in the later part of the year and not being paid out by year end. The
Deferred revenues from externally restricted contributions also (in thousands of dollars) 2018 2017 increased by $4.9 million directly linked to the increase in market Accumulated surplus value of the portfolio for which a portion is externally restricted. This liability consists of externally restricted investment income and Endowment - Original contribution $ 50,000 $ 50,000 accumulated gains which are being deferred until the resources are Endowment principal - Externally used for the specified purposes. The original externally restricted restricted contributions 37,569 37,569 endowment principal of $37.6 million is required to be maintained Reserve for excess investment intact and is reported under accumulated surplus. income 186,445 141,445
Surplus 29,675 25,416 The other liabilities include: Total accumulated surplus from • deferred revenues which are mostly related to the leasehold operations $ 303,689 $ 254,430 inducement at 150 Elgin, Ottawa, which is being amortized over Accumulated remeasurement gains the lease period of 20 years; 20,565 48,419 • accounts payable and accrued liabilities which represent Accumulated surplus $ 324,254 $ 302,849 outstanding payments to various suppliers/managers for services rendered and some payroll liabilities incurred as of March 31, 2018; The $50 million Endowment - Original contribution represents the and original government transfer in 1957 of endowments which enabled • employee future benefits representing the severance entitlements the establishment of the Council. The externally restricted of the Council’s employees and post-retirement benefits covering endowment principal of $37.6 million represents the original value of employees and retirees. other endowment funds received by the Council over the years almost entirely from private individuals. By recording these values within accumulated surplus the endowments, while held separate, Non-Financial Assets are in effect being treated as if they had been revenues.
Tangible capital assets include office equipment, leasehold The total reserve of $186.4 million at March 31, 2018 represents the improvements and work in progress related to the development of a sum of excess investment income relating to the original endowment new information management system. The net increase in this asset principal since the establishment of the Council. category of $0.9 million in comparison to the prior year is mainly attributable to an investment of $2.6 million in the Council’s technology infrastructure and its new Portal offset by a $1.7 million in amortization.
34 OPERATIONS Summary Statement of Operations for the Years Ended March 31 Investment Income Budget Actual Actual (in thousands of dollars) 2018 2018 2017 The financial markets in which the Council invests are diversified and, in 2017-18, the Endowment and Special Funds and the Killam Fund Parliamentary appropriations $ 257,572 $ 258,514 $ 222,574 were in the top quartile of their peer group with strong annual Net realized investment income 10,282 51,871 14,878 returns of 8.0% (12.1% in 2016-17) and 8.4% (12.4% in 2016-17) respectively. The annual returns for the Endowment and Special Other revenues 1,271 1,616 1,785 Funds and the Killam Fund are, respectively, 2.0% and 2.4% above Total Revenues 269,125 312,001 239,237 the benchmark of 6.0%.
Transfer programs 248,182 241,131 215,930 The Council’s investment policy prescribes for 2017-18 that cash can Net Art Bank results 275 253 182 be withdrawn from the portfolio at a rate of up to 3.5% of the Canadian Commission for previous three-year average market value for both the Endowment UNESCO 2,406 2,638 2,326 and Special Funds and the Killam Fund. This approach recognizes the General administration 18,246 18,720 15,956 need to balance returns with the long-term preservation of capital.
Total expenses 269,109 262,742 234,394 The following chart shows the annual portfolio returns for the Council Surplus in each year since 2008 and the corresponding effect that those from operations $ 16 $ 49,259 $ 4,843 returns have had on the year-end market value. The chart also The Council’s net financial results for the year is a surplus of $49.3 demonstrates how the investment market returns can fluctuate year million, compared to a balanced budget forecast of a surplus of over year. The Council reinvests excess investment income above the $16 thousand. In 2016-17 the Council’s surplus was $4.8 million. budgeted amount in order to ensure the continued growth of the funds. This proactive approach is intended to bring additional The current surplus is primarily attributable to a $41.6 million positive stability and long-term growth for the Council’s investment portfolio. variance in net realized investment income compared to budgeted income and less than expected transfer program delivery costs of $3.5 Annual Portfolio Returns million. The Digital Strategy Fund spent $3.9 million less in grants than 40% 400.0 originally planned, which has been carried over to the Fund in 2018-19. 30% 350.0 20%
The total expenses of $262.7 million in 2017-18 is $6.4 million less 10% 300.0 than budgeted. The first part is due to underspending of $3.0 million 0% 250.0 in grants expenses which is due to the carry-over of $3.9 million from -10% Market Value ($000) Annual Returns (%) Returns Annual the Digital Strategy Fund to 2018-19 offset by $0.9 million of 200.0 intra-year savings which was reinvested in grants in 2017-18. Due to -20% the uncertainty related to the volume of applications in the first year -30% 150.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 of the New Funding Model, only a portion of savings was reinvested Years Ending March 31 in grants. The second part is primarily attributable to underspending Endowment Killam MV Ending of $3.5 million in transfer program delivery costs. In addition, there was $0.5 million in savings in arts community services, however, This year, with the positive annual performance of its portfolio, the these savings are offset by the overspending of $0.5 million in Council recorded $51.9 million in net realized investment income due general administration expenses. to a significant realized gain incurred during a transition of Global Equity managers and a high distribution of income with the positive Parliamentary Appropriations annual performance of its portfolio.
The Council receives its main funding through Parliamentary appropriations voted by Parliament. The Council records the Other revenues Parliamentary appropriations received in the period as revenue in the Statement of Operations. The Council submits a monthly cash flow Other revenues include the cancellation of grants awarded in previous analysis to the Department of Canadian Heritage to justify its years, boardroom rental fees, donations, tax rebates, hosting fees and monthly drawdown cash requirements. The monthly drawdown is other sources of revenues received. During the year, Council received invested in a short-term pooled fund managed by a professional unexpected revenues such as two donations, from Michael J. Fox and investment manager from which the Council draws its daily cash Barbara Helen Green, and a higher than expected transfer from requirements. For the year ended March 31, 2018, the appropriations deferred membership revenues to cover the costs of a technical and received by the Council were $258.5 million, an increase of $35.9 functional review of the CADAC web application. These explain the million over 2016-17, of which $35.0 million was from the 2016 positive variance of $0.3 million compared to budgeted amounts. Federal Budget announcement and the balance of $0.9 million through supplementary estimates.
35 rental of the Arsenale Area in Venice for the 16th International Program expenses Architecture Exhibition and $0.3 million in support for an initiative from the Cultural Human Resources Council to equip the cultural Program expenses for the years ending March 31 include the sector with tools, practices and training for building and maintaining following five components: respectful workplaces. The Council also engaged in a new qualitative Budget Actual Actual research project on impact assessment of the arts for cost of $0.2 (in thousands of dollars) 2018 2018 2017 million this year. Grant, author payments and prizes $ 221,939 $ 218,892 $ 196,793 Net Art Bank results were $22 thousand below budget in 2017-18 due Transfer program delivery 23,266 19,764 16,886 to higher than forecast rental revenues of $187 thousand which were Arts community services 2,977 2,475 2,251 offset by unanticipated costs such as $32 thousand in the donation of artworks removed from inventory, and $67 thousand in additional Net Art Bank results 275 253 182 resources to support the growth in artwork rentals. That growth is a Canadian Commission for result of promoting the Art Bank and its services through outreach UNESCO 2,406 2,638 2,326 activities such as exhibitions and loans, and also being more active in $ 250,863 $ 244,022 $ 218,438 the private sector. In 2017-18, program expenses accounted for 93% of Council’s total expenses of $262.7 million, the same ratio as previous year. Overall, The Canadian Commission for UNESCO (CCUNESCO) had net program expenses are $25.6 million more than the previous year due expenses of $2.6 million in 2017-18, an increase of $0.3 million in to a combination of the additional funding received from government comparison to last year, but slightly over budget by $0.2 million. The and operational savings or underspending. increase in expenses this year compared to budget is due to two collaborations with the Department of Canadian Heritage, one for The vast majority of the program expenses relate to grants, author $0.2 million to UNESCO Heritage Emergency Fund and another one payments and prizes at $218.9 million which were $3.0 million below for $0.1 million to the Coalition for Cultural Diversity. CCUNESCO, budget, even with a $1.0 million reinvestment from identified savings established by an Order in Council in 1957, coordinates UNESCO in operations, due to the carry-forward of $3.9 million in grants from program activities in Canada; encourages Canadian participation in the Digital Strategy Fund into the next fiscal year. The $22.1 million UNESCO activities abroad, including the provision of expert advice increase compared to the previous year is explained mostly by an and assistance from both governmental and non-governmental inflow in grants budget this year of $30.9 million, which represents organizations; and provides advice about future UNESCO programs 88% of the $35.0 million increase in new fund this year, less the $3.9 and budgets to the Department of Global Affairs Canada. million carried over to next year for the Digital Strategy Fund. Another contributor to this variance is that last year the Council was able to General Administration reinvest a total of $5.8 million into grants expenses from savings compared to only $0.9 million this year. General administration expenses include the cost of the Council Secretariat, Communications, and Corporate Services (which includes Transfer program delivery costs represent the direct cost of operating Finance, Human Resources, Information Management/Technology the Council’s grants, prizes and Public Lending Right programs. These and Administrative Services). Items include salaries and benefits, include salaries, benefits, adjudication of programs, travel, professional travel, accommodation, professional services, amortization, and services and prizes promotion. These costs are $3.5 million below others. At $18.7 million, these costs were higher than anticipated by budget demonstrating the Council’s constant efforts to exercise fiscal $0.5 million and represented 7% of total expenses, the same restraint and seek economies regarding these costs but also include percentage as in 2016-17. The Council will continue to exercise fiscal $1.7 million in savings from program adjudication mostly due to a restraint and seek efficiencies regarding general administration costs lower volume of applications to assess than anticipated this year in the next fiscal years. because of the transition to the New Funding Model. Additional savings of $0.9 million in salaries and benefits are due to delays in staffing various positions. The Council will continue to review and REMEASUREMENT GAINS simplify processes by modernizing its current systems over the next AND LOSSES fiscal years. The accumulated remeasurement gains from portfolio investments as Services provided for the arts community include other types of at March 31, 2018 were $20.6 million. These are the accumulated financial support such as partnerships (which provide funding to unrealized gains, net of reclassification to the Statement of support the arts), research, workshop expenses, event costs and Operations upon realization, for changes in fair value of the Council’s program evaluation. These costs were higher than the previous year unrestricted portfolio investments. by $0.2 million but lower than budget by $0.5 million. This year the Council embarked in new partnerships such as a $0.3 million for the
36 RISK MANAGEMENT Risk Governance
Effective risk management is fundamental to the success of the Council The Council’s risk management governance begins with oversight by its in fulfilling its mandate. The Council continues to develop a strong risk Board, either directly or through its committees, to ensure that management culture where risk management is a responsibility shared decision-making is aligned with strategies and risk appetite. The Board by all of its employees. The primary goals of enterprise risk receives regular updates on the Council’s key risks regarding its risk management are to ensure that the outcomes of risk-taking activities profile and related mitigation, financial performance and performance are consistent with the Council’s plans, strategies and risk appetite. of the investment portfolio. The Council’s executive management is responsible for risk management under the direct oversight of the The Council’s existing risk management framework consists of four key Board. elements: In February 2017, the Council reviewed its Corporate Risk Profile taking • risk governance; into consideration changes in the Council’s risk environment. This • risk appetite; included a re-assessment of the risks and updates to the Council’s • risk profile, assessment and mitigation; and, significant potential risks as well as mitigation strategies. • financial risk mitigation.
Risk Appetite
The Canada Council for the Arts follows a prudent risk-taking approach in managing its activities. It defines prudent risks as those seen to contribute to the organization’s capacity to better deliver its mandate within a range of consequences that are well understood and appropriately mitigated. It manages risk within the constraints of its mandate, values, organizational culture, and both its public and internal commitments.
Risk Category Area of Work Canada Council Risk Appetite Strategic risk Mandate and reputation The Canada Council will avoid any situations that could adversely affect its support of the arts in Canada.
The Canada Council is cautious in accepting risks that could affect its ability to build and sustain reputational strength with the public.
The Canada Council will accept risk in activities that support artistic aspirations, creativity and innovation as these are essential to the development and evolution of a vital and diverse arts sector that enriches the lives of all Canadians.
Program delivery risk Granting processes The Canada Council is accountable to its stakeholders (government, clients and the general public) for the effective delivery of its funding programs. As such, it will avoid any situations that could negatively impact the rigour and transparency of its granting processes.
With regards to its suite of funding programs and support to the arts community, the Canada Council will not put at risk its ability to be flexible and responsive to changes in the arts environment.
Human Resources risk Internal structure The Canada Council is willing to accept moderate risks that could lead to improved Staffing internal structure, staffing and services, as well as overall strategy execution to enable continuous improvement of its operating performance.
Information and systems Services The Canada Council is willing to accept moderate risks that could lead to improved risk Systems processes and efficiencies in program delivery to enable continuous improvement of its operating performance.
Financial risk Financial management The Canada Council will avoid any financial decisions or activities that would negatively Investments impact its long-term cost-effectiveness.
Risk decisions for investments will be consistent with the Council Board Statement of Investment Beliefs and Statement of Investment Policies and Goals.
Compliance risk Legislative and corporate The Canada Council will avoid any risks that could affect its capacity to independently reporting requirements govern itself or its ability to meet its legislative obligations.
37 Risk Profile
Using the Council’s risk appetite as key context, the following risks, as identified and assessed during the risk assessment process in February 2017, are considered to be outside of the Council’s appetite:
1) Workload levels; and 2) Inadequate technology tools and systems.
Consequently, for these, focused updated risk mitigation strategies have been developed and action plans implemented and monitored by assigned members of the executive management to reduce the risk exposure. Regular updates on these risks are provided to the Audit & Finance committee to ensure continuous oversight and that effective mitigation strategies have been put in place.
Financial Risk
The Council is exposed to a variety of financial risks as a result of its activities. These include credit risk, liquidity risk and market risk. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Council. A significant portion of Council’s receivables were deposited within 30-60 days after year-end and as such the related credit risk is very low. Liquidity risk is the risk that Council will not be able to meet its financial obligations as they fall due. The Council currently receives most of its revenues by way of Parliamentary appropriations drawn down monthly. That revenue is invested in a short-term pooled fund or in a preferred rate account at a financial institution bank until it is required. The Council’s investment activities are primarily exposed to price risk, interest rate risk and currency risk. The directive to the Council’s investment managers is to manage the Council’s market risks on a daily basis in accordance with the Council’s policies. Overall market positions are monitored quarterly by the Investment Committee and the Board.
38 GOVERNANCE
39 Board Mandate Culture of Ethical Business Conduct
The Canada Council for the Arts is led by a Director and CEO Board members, as public office holders, are bound by the federal appointed by the Governor in Council, and governed by a Board government’s Conflict of Interest Act and the Ethical Guidelines consisting of a Chair, Vice-Chair and nine other members from across and Statutory Standards of Conduct. The Board is required to disclose Canada. Members are appointed by the Governor in Council for fixed any real, apparent or potential conflicts of interest on an annual terms. The Board meets at least three times a year and is responsible basis, and as they occur throughout the year. for the oversight of the organization’s policies, programs, budgets and grant decisions. Corporate Social Responsibility
As stewards of the Council, the Board oversees the organization’s The Council is committed to carrying out its role and mandate in a governance. It conducts the Council’s business, directs Management way that is guided by corporate social responsibility. As such, it and ensures that all major issues affecting the organization are given strives to be a leader in terms of social, ethical and environmental proper consideration. The Board is accountable to Parliament policies and practices, and considers social, ethical and environmental through the Minister of Canadian Heritage. impacts in all decisions.
The general duties of the Board are described in the Council’s In an effort to fulfill this commitment, the Council: By-laws and Governance Policy. • conducts its business with honesty, integrity and fairness, and ensures ethical considerations and implications are embedded in all decision-making processes; Highlights • works with and is inspired by the community that it serves —Canadians, as a whole. It strives to engage Canadians through In 2017-18, the Board held four meetings in Ottawa and three a vital and diverse arts sector that enriches communities and teleconferences, during which it: reaches markets across the world; • welcomed six new Board members from across Canada • strives to provide an organizational climate that encourages who brought a wide range of significant experience, knowledge well-being, and stimulates and supports employee performance and expertise; and development; • approved nominations of new members on the Audit and • is forward-thinking and proactive in reducing its environmental Finance Committee, the Governance and Nominating Committee footprint, and incorporates environmental sustainability and the Investment Committee which enhanced the overall considerations into its activities; and effectiveness of the Board; • recognizes the importance of public accountability and open • continued to exercise its oversight role over the development of communications, and conducts its business in a transparent manner the Council’s New Funding Model and the Digital Strategy Fund; in order to maintain the trust and confidence of its stakeholders. • exercised oversight on the Council’s budgets and various policies, including changes to the Board Statement on Investment The Board oversees these commitments and is responsible for Beliefs and the Delegation of Authority; integrating social, environmental and ethical considerations into all • approved the revised Council By-laws, Governance Policy, and Public Board-related matters. The Council’s Corporate Social Responsibility Lending Right Commission Constitution and By-laws; • approved grants and contracts over $500,000 and; Statement of Principles is available on its website. • held the Annual Public Meeting at the Council’s offices at 150 Elgin Street, Ottawa, on January 23, 2018. Appointments
Board Independence The Board advises the government on appropriate selection criteria for the Chair and Vice-Chair of the Board, as well as competency All members of the Board are independent members. While the profiles and future needs for Board members and for the position of Director and CEO and Executive Management attend Board meetings Director and CEO. to provide information and report on activities, only Board members may vote and make decisions. Board committees are composed of In 2017-18, six new Board members were appointed and two were Board members, with some including external experts selected for reappointed by the Governor in Council. The Board Vice-Chair’s term their knowledge and expertise. ended on March 30, 2018. The Notice of Opportunity for the Vice-Chair position on the Board of the Council was posted by the Privy Council on the Governor in Council website from January 31, 2018 to February 16, 2018.
At March 31, 2018, there was one Board vacancy.
40 Board Diversity Communications and Reporting
The Canada Council has a history of embedding values of equity within In accordance with specific Acts and Regulations, and to ensure its operations. The Board Diversity Statement of Principles is intended ongoing communications and transparency, the Council submits to summarize and make public the Council’s values and objectives a number of reports on an annual basis to different government related to Board diversity. This includes representation on the Board of departments in line with deadlines set by the legislation and/or the Canada’s official languages, regions, generations, Indigenous peoples, responsible departments. cultural diversity and gender equity. Annual Public Meeting
Board Orientation and Continuing On January 23, 2018, the Council held its Annual Public Meeting (APM) in Ottawa. It reported on its recent activities and plans for the Education future, and engaged with interested stakeholders. The Director and CEO, Chair, Vice-Chair, Board members and senior staff were present. All new Board members are required to attend the Orientation for The meeting was live-streamed across the country in English, French Directors of Crown Corporations offered by the Canada School of and Sign Languages (ASL and LSQ). Public Service. This program has been designed to provide Board members with information on their basic roles and accountabilities The APM reached a large audience, including approximately 100 guests and the unique circumstances of Crown corporation governance. on site and over 500 online via the livestream that day. The A total of six Board members attended this course in 2017-18. conversation continued on social media, notably with hashtags #Council18 and #Conseil18 on Twitter. As part of the APM, guests New Board members receive a comprehensive information package were invited to enjoy the opening reception of Constructed Identities, prior to their first meeting. They also have an orientation session an exhibition from Tangled Art + Disability, in the Âjagemô space. with Executive Management and sit in on committee meetings to learn about the Council’s work. Orientation sessions are held with new Speeches, a video of the APM, questions and answers, and a full list members appointed to Board committees before the first committee of news coverage were made available on the Council’s website. meeting that a newly-appointed Board member is scheduled to attend.
Access to Information Act and Privacy Act (ATIP)
Performance Evaluation An annual ATIP report, including statistical data on the Council’s administration of the Acts, is submitted to the Department of Annually, under the direction of the Governance and Nominating Canadian Heritage and tabled in Parliament. Committee, the Board evaluates the performance of the full Board and its committees. Work was undertaken throughout 2017-18 to implement the recommendations resulting from the previous year’s Canadian Multiculturalism Act Board evaluation. The Canada Council is responsible for completing an Annual Report on the Operation of the Canadian Multiculturalism Act. This report is The Director and CEO performance is assessed annually by the submitted annually to Canadian Heritage. Board, according to the Privy Council Office’s Performance Management Program for Chief Executive Officers of Crown Corporations. The Board communicates the results of the Director Employment Equity Act and CEO’s annual performance evaluation to the Minister of As a federal organization with over 100 employees, the Council files Canadian Heritage. an annual Employment Equity Report with Human Resources and Skills Development Canada.
Official Languages Act
The Canada Council is responsible for implementing Parts IV, V, VI and VII of the Official Languages Act. It submits a multi-year action plan to Canadian Heritage regarding section 41 of Part VII of the Act. The Council also presents an annual review detailing its activities under Part VII to the Department of Canadian Heritage. Every three years it presents a report on Parts IV, V, VI and VII to Canadian Heritage and the Treasury Board Secretariat; the next report of this kind will be submitted for 2018-19.
41 Board Committees
Board committees enhance the overall effectiveness of the Board by ensuring closer focus, oversight and monitoring of areas of particular concern. The committees’ roles, responsibilities and reporting requirements are defined in the Council’s By-laws. There are four standing committees of the Board:
Executive Committee
The Executive Committee acts on behalf of the Board (with exceptions related to the approval or amendments of By-laws, policies, budgets, financial statements, grants or the Annual Report) in the interval between meetings of the Board.
Membership: Pierre Lassonde (Chair), Nathalie Bondil (Vice-Chair Della McCreary Photo: until March 30, 2018), Beverley K. Foy, Isabelle Hudon (until flicker doll from Persimmon Blackbridge. Constructed Identities September 30, 2017), Cheryl Hickman (as of October 1, 2017). exhibition. Curator: Tangled Art + Disability. Presented at the Âjagemô space at the beginning of 2018. Persimmon Blackbridge’s figurines redefine the way disability is presented and perceived Audit and Finance Committee in our society.
The Audit and Finance Committee provides oversight of the Council’s financial performance and ensures the integrity, effectiveness and THE 2018 APM: SPEAKING accuracy of Council’s financial reporting, control systems, integrated risk management processes and audit functions. OPENLY ABOUT ART
Membership: Beverley K. Foy (Chair), Isabelle Hudon (until September At its Annual Public Meeting (APM), the Canada Council 30, 2017), David Binet (as of June 15, 2017) and Cheryl Sharfe. for the Arts reports on its activities over the year and discusses specific projects and current issues. In January 2018, more than 100 people attended the APM in person; Governance and Nominating Committee over 500 people from across Canada participated via the The Governance and Nominating Committee provides ongoing review webcast. This year’s APM generated a record number of and recommendations to the Board with respect to discharging questions from the public that produced vibrant discussions. its stewardship and oversight responsibilities on matters relating to After the meeting, discussions in both English and French corporate governance, the conduct of the Board’s affairs, and human continued to generate interest via social media. resources strategies and other related matters. Each year’s APM also gives the Council a chance to Membership: Isabelle Hudon (Chair until September 30, 2017), showcase artistic excellence and this year the focus was Cheryl Hickman (Chair as of October 1, 2017) Cheryl Sharfe, and on arts practice by artists with disabilities—in particular Jesse Wente (as of June 15, 2017). with the screening of a video by Propeller Dance of Ottawa, an organization that received a grant increase in Investment Committee 2017. Dancers Sami Elkout and Sylvain Bouchard (who performs in a wheelchair) presented an excerpt from The Investment Committee oversees and provides expert advice Circuit, with choreography by Shara Weaver and music on the Council’s investment portfolio, including recommending Board by Larry Graves. policies with respect to investments, hiring professional fund managers and monitoring their activities. The APM ended with the launch of the Constructed Identities, an exhibition from Tangled Art + Disability in the Membership: Beverley K. Foy, David Binet (as of June 15, 2017) and Council’s Âjagemô space. This exhibition of works by the following external experts: George Mavroudis (Chair), Kiki Delaney, Persimmon Blackbridge—also in the field of disability Ann Marshall, John Montalbano, Paul Robillard, Kim Shannon (as of arts—featured a series of figurines made of combinations March 27, 2018) and Michael White. of sculpted wood and found objects meant to inspire reflections about how disability is presented in our society. For the first time at Ajagemô, the exhibition was fully accessible via audio description, descriptive videos in sign language, and tactile devices.
42 Advisory Groups Remuneration
Jennifer Dorner serves as Board representative on the Canadian Board: $92,050 Commission for UNESCO Executive Committee since June 15, 2017. Director and CEO: $214,900-$252,800 (fixed by Governor in Council) Executive positions: $106,900-$157,500 Ben Nind serves as Board representative on the Canadian Public Arts Funders since June 15, 2017. Disclosure of Wrongdoing
Proactive Disclosure In compliance with the Council’s Policy on the Internal Disclosure of Wrongdoing in the Workplace, which is based on the requirements The disclosure of grants and contributions, travel and hospitality of the Public Servants Disclosure Protection Act, a quarterly report expense information of Board members and senior executives, on the disclosure of wrongdoing in the workplace is provided to the contracts entered into for amounts over $10,000, the reclassification of Audit and Finance Committee. In 2017-18, there were no internal positions and summary reports of completed access to information disclosures of wrongdoing in the workplace. requests are posted on the Council’s website.
Executive Management Committee
Photo: Martin Lipman Photo:
As at March 31, 2018, the Executive Management Committee consisted of (from left to right): Joanne Larocque-Poirier, Chief of Staff and Corporate Secretary; Ian Lovsin, Chief Information Officer; Carolyn Warren, Director General, Arts Granting Programs; Michelle Chawla, Director General, Strategy and Public Affairs; Simon Brault, Director and CEO; Carole Boileau, Chief Financial Officer and Chief Security Officer; Tammy Scott, Director General, Communications and Public Engagement.
43 Board Members
Pierre Lassonde Nathalie Bondil David Binet Beverley K. Foy Jennifer Dorner Chair (Toronto, ON) Vice-Chair (Montréal, QC) (Toronto, ON) (Calgary, AB) (Montréal, QC)
Cheryl Hickman Ben Nind Yann Martel Cheryl Sharfe Jesse Wente (St. John’s, NL) (Yellowknife, NT) (Saskatoon, SK) (Winnipeg, MB) (Toronto, ON)
Board and Committee Meetings and Attendance (April 1, 2017 to March 31, 2018)
Board Executive Investment Audit and Governance Meetings Committee Committee Finance and Nominating Committee Committee
Total # of Meetings 7 0 4 7 4
Pierre Lassonde, Chair 7/7 -- Ex officio Ex officio Ex officio Nathalie Bondil, Vice-Chair 4/7 -- Ex officio Ex officio Ex officio David Binet 5/7 N/A 2/3 5/7 N/A Jennifer Dorner 7/7 N/A N/A N/A N/A Beverley Foy 7/7 -- 4/4 7/7 N/A Cheryl Hickman 7/7 -- N/A N/A 4/4 Isabelle Hudon 1/1 -- N/A 2/2 1/1 Ben Nind 6/7 N/A N/A N/A N/A Yann Martel 5/7 N/A N/A N/A N/A Cheryl Sharfe 6/7 N/A N/A 7/7 4/4 Jesse Wente 6/7 N/A N/A N/A 4/4
Notes: • Nathalie Bondil’s term as Vice-Chair ended on March 30, 2018. She became a Board member on March 31, 2018. • David Binet was appointed to the Board on April 5, 2017. He became a member of Audit and Finance Committee and the Investment Committee on June 15, 2017. • Jennifer Dorner was appointed to the Board on June 6, 2017. She became the Board representative on the CCUNESCO Executive Committee on June 15, 2017. • Beverley Foy’s term was renewed for four years, effective June 6, 2017. • Cheryl Hickman was appointed to the Board on April 5, 2017. She became the Chair of the Governance and Nominating Committee on October 1, 2017. • Isabelle Hudon’s term ended on September 30, 2017. • Ben Nind was appointed to the Board on April 5, 2017. He became the Board representative on the Canadian Public Arts Funders on June 15, 2017. • Yann Martel was appointed to the Board on April 5, 2017. • Jesse Wente was appointed to the Board on April 5, 2017. He became a member of the Governance and Nominating Committee on June 15, 2017. 44 FINANCIAL STATEMENTS
4545 MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying financial statements of the Canada Council for the reporting and internal controls. They exercise this responsibility Arts (the “Council”) and all the information in this annual report are through the Audit and Finance Committee, which is composed of the responsibility of Management and have been approved by the members who are not employees of the Council. The Audit and Board. Finance Committee meets with Management, the internal auditors and the Auditor General of Canada on a regular basis. The Committee The financial statements have been prepared by Management in reports its findings to the Board for consideration when approving accordance with Canadian public sector accounting standards. When the financial statements. alternative accounting methods exist, Management has chosen those it deems most appropriate in the circumstances. The financial The independent auditor, the Auditor General of Canada, is responsible statements include amounts based on Management’s best estimates for auditing the financial statements of the Council, and for issuing as determined through experience and judgment. Management has the report thereon. determined such amounts on a reasonable basis in order to ensure that the financial statements are presented fairly, in all material June 14, 2018 respects. Management has prepared the financial information presented elsewhere in the annual report and has ensured that it is consistent with that in the financial statements.
The Council maintains systems of internal accounting and administrative controls of high quality, consistent with reasonable Simon Brault, O.C., O.Q., FCPA, FCGA cost. Such systems are designed to provide reasonable assurance that Director and Chief Executive Officer the financial information is relevant, reliable and accurate and that the organization’s assets are appropriately accounted for and safeguarded.
The Board is responsible for the management of the business and activities of the Council. In particular, they are responsible for Carole Boileau, CPA, CA ensuring that Management fulfills its responsibilities for financial Chief Financial Officer
46 47 48 Statement of Financial Position
As at March 31 (in thousands of dollars) 2018 2017 FINANCIAL ASSETS
Cash and cash equivalents (Note 4) $ 39,245 $ 23,490 Accounts receivable 3,080 3,424
Portfolio investments (Note 5) 389,420 369,623 Total financial assets 431,745 396,537 LIABILITIES Grants, author payments and prizes payable 69,547 59,354 Accounts payable and accrued liabilities 3,782 4,609 Deferred revenues 7,728 7,435
Employee future benefits (Note 7) 3,482 3,232
Deferred revenues - Externally restricted contributions (Note 8) 51,665 46,768 Total liabilities 136,204 121,398
NET FINANCIAL ASSETS $ 295,541 $ 275,139
NON-FINANCIAL ASSETS
Tangible capital assets (Note 9) 9,021 8,132
Art Bank assets (Note 10) 19,421 19,415
Musical instruments (Note 11) 1 1 Prepaid expenses 270 162 Total non-financial assets 28,713 27,710
ACCUMULATED SURPLUS (Note 12) $ 324,254 $ 302,849
Accumulated surplus is comprised of: Accumulated surplus from operations 303,689 254,430 Accumulated remeasurement gains 20,565 48,419 ACCUMULATED SURPLUS $ 324,254 $ 302,849
Contractual obligations and commitments (Note 17)
The accompanying notes and schedules form an integral part of the financial statements
APPROVED BY THE BOARD
Chair Vice-Chair
49 Statement of Operations Budget Actual Actual
For the year ended March 31 (in thousands of dollars) 2018 2018 2017 Revenues
Net realized investment income (Note 13) $ 10,282 $ 51,871 $ 14,878 Other revenues 1,271 1,616 1,785
Total revenues 11,553 53,487 16,663 Expenses Transfer Programs
Grants, author payments and prizes (Schedule I) 221,939 218,892 196,793
Transfer program delivery (Schedule II) 23,266 19,764 16,886
Arts community services (Schedule III) 2,977 2,475 2,251 248,182 241,131 215,930
Net Art Bank results (Note 14) 275 253 182
Canadian Commission for UNESCO (Note 15) 2,406 2,638 2,326
General administration (Schedule II) 18,246 18,720 15,956
Total expenses 269,109 262,742 234,394 Deficit from operations before Parliamentary appropriations (257,556) (209,255) (217,731) Parliamentary appropriations 257,572 258,514 222,574 SURPLUS FROM OPERATIONS 16 49,259 4,843 ACCUMULATED SURPLUS FROM OPERATIONS, BEGINNING OF YEAR 254,430 254,430 249,587 ACCUMULATED SURPLUS FROM OPERATIONS, END OF YEAR $ 254,446 $ 303,689 $ 254,430
Statement of Remeasurement Gains and Losses
For the year ended March 31 (in thousands of dollars) 2018 2017 ACCUMULATED REMEASUREMENT GAINS, BEGINNING OF YEAR $ 48,419 $ 31,158 Unrealized gains (losses) attributable to: Portfolio investments (2,157) 20,912 Amounts reclassified to the Statement of Operations: Portfolio investments (25,697) (3,651) NET REMEASUREMENT (LOSSES) GAINS FOR THE YEAR (27,854) 17,261 ACCUMULATED REMEASUREMENT GAINS, END OF YEAR $ 20,565 $ 48,419
The accompanying notes and schedules form an integral part of the financial statements
50 Statement of Change in Net Financial Assets Budget Actual Actual
For the year ended March 31 (in thousands of dollars) 2018 2018 2017
ANNUAL SURPLUS FROM OPERATIONS $ 16 $ 49,259 $ 4,843
Acquisition of tangible capital assets (Note 9) (2,700) (2,542) (2,000)
Amortization of tangible capital assets (Note 9) 1,563 1,653 1,216
Acquisition of Art Bank assets (Note 10) - (38) (31)
Disposal of Art Bank assets (Note 10) - 32 - (1,137) (895) (815) Acquisition of prepaid expenses - (308) (199) Use of prepaid expenses - 200 221 - (108) 22 Net remeasurement (losses) gains - (27,854) 17,261 INCREASE (DECREASE) IN NET FINANCIAL ASSETS (1,121) 20,402 21,311 NET FINANCIAL ASSETS, BEGINNING OF YEAR 275,139 275,139 253,828
NET FINANCIAL ASSETS, END OF YEAR $ 274,018 $ 295,541 $ 275,139
Statement of Cash Flow
For the year ended March 31 (in thousands of dollars) 2018 2017 Operating Transactions Surplus from operations $ 49,259 $ 4,843
Gains from disposal of portfolio investments (Note 13) (33,227) (5,570)
Amortization of tangible capital assets (Note 9) 1,653 1,216
Donations of Art Bank assets (Note 10) 32 - (Increase) decrease in prepaid expenses (108) 22 Increase in employee future benefits 250 323
Income transferred to Deferred revenues - Externally restricted contributions from investment income (Note 8) 13,273 2,083
Net change in other non-cash items (Note 16) 10,718 31,737 Cash provided by operating activities 41,850 34,654 Capital Transactions
Acquisition of tangible capital assets (Note 9) (2,951) (1,387)
Acquisition of Art Bank assets (Note 10) (38) (31) Cash used by capital activities (2,989) (1,418) Investing Transactions Acquisition of portfolio investments (110,539) (68,102) Disposal of portfolio investments 86,310 59,746 Cash used by investing activities (24,229) (8,356) NET INCREASE IN CASH AND CASH EQUIVALENTS 14,632 24,880 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 24,729 (151) CASH AND CASH EQUIVALENTS, END OF YEAR 39,361 24,729 Represented by: Cash 25,435 292
Cash equivalents (Note 4) 13,810 23,198 39,245 23,490 Cash held for investment purposes included in the portfolio investments 116 1,239 $ 39,361 $ 24,729
The accompanying notes and schedules form an integral part of the financial statements
51 Notes to the Financial Statements March 31, 2018
1. AUTHORITY, MANDATE AND ACTIVITIES Financial asset or liability Subsequent measurement Cash equivalents Fair value The Council, established by the Canada Council Act in 1957 and subsequently Accounts receivable Amortized cost amended in 2001 by Bill C-40 to the Canada Council for the Arts Act, is not an Portfolio investments Fair value agent of Her Majesty and is deemed to be a registered charity for the purposes of Bank indebtedness Fair value the Income Tax Act. In accordance with section 85(1.1) of the Financial Administra- Grants, author paymentsAmortiz ed and cost prizes payable tion Act, the Council is exempt from Divisions I to IV of Part X of this Act, except Accounts payable Amortizand ed accruedcost liabilities for subsection 105(2) and sections 113.1 and 119 of Division II, sections 131 to 148 of Division III and section 154.01 of Division IV. The Council is a Crown corporation Cash equivalents whose objectives are to foster and promote the study and enjoyment of, and the production of works in, the arts. Cash equivalents represent short-term, highly liquid investments that are readily convertible into known amounts of cash and that are subject to an insignificant The Council achieves its objectives primarily through grant programs to profes- risk of change in value. Cash equivalents on the Council’s Statement of Financial sional Canadian artists and arts organizations. The Council incurs administration Position comprise units in a short-term pooled fund. Distributed income is and services expenses in the delivery of programs. Transfer Program delivery recorded on an accrual basis and is recognized in the Statement of Operations expenses represent the direct costs of program delivery. Arts community services under net realized investment income during the year in which it is earned. expenses represent costs incurred for non-grant activities in fulfillment of the Council’s mandate. General administration costs represent the costs related to corporate management, communications, human resources, information Portfolio investments management, finance, accommodation and amortization. Unrealized changes in the fair value of portfolio investments are recognized in the Statement of Remeasurement Gains and Losses, except for the restricted portion The Canadian Commission for UNESCO (CCUNESCO) was established by the which is recognized as a liability under Deferred revenues - Externally restricted Council pursuant to a 1957 Order in Council. The CCUNESCO acts as a forum contributions. Once realized, the cumulative gain or loss previously recognized for governments and civil society to mobilize the participation of Canadians in in the Statement of Remeasurement Gains and Losses is recorded in net realized UNESCO’s mandated areas of education, natural and social sciences, and culture, investment income on an average cost basis for the year. The realized gains and communication and information. The Secretariat for the CCUNESCO is provided losses on externally restricted contributions are recognized in accordance with by the Council and led by a Secretary General who reports directly to the Director the externally restricted contributions accounting policy. Purchases and disposi- and Chief Executive Officer. tions of portfolio investments are recorded on the trade date. Management fees charged are expensed in the year they are incurred.
The cash held for investment purposes is included in portfolio investments in 2. ADOPTION OF NEW ACCOUNTING STANDARDS the Statement of Financial Position and also shown as a separate item in the The Public Sector Accounting Board (PSAB) issued new accounting standards Statement of Cash Flow. effective for fiscal years beginning on or after 1 April 2017. A decline in the fair value considered to be other than temporary will be As a result, the Council adopted an accounting policy for Inter-entity transactions recognized as an impairment loss and will be removed from the Statement of (PS 3420). This new Section establishes standards on how to account for and Remeasurement Gains and Losses and reported in net realized investment income report transactions between public sector entities that comprise a government’s in the Statement of Operations. reporting entity from both a provider and recipient perspective. The adoption of this new standard did not result in any financial impact on the Council’s financial Tangible capital assets statements. See Note 3 for the Council’s Inter-entity transactions accounting Office equipment and leasehold improvements are carried at cost less policy. accumulated amortization. Amortization is calculated using the straight-line The Council also adopted the new accounting standards for Related party method, over the estimated useful lives of the assets as follows: disclosures (PS 2200), Assets (PS 3210), Contingent assets (PS 3320) and Office equipment 5 years Contractual rights (PS 3380). These new accounting standards only impact note Leasehold improvements remaining term of the lease disclosures. The adoption of PS 2200, PS 3210, PS 3320 and PS 3380 did not result in a significant impact on the disclosures included in the Council’s financial Work in progress represents the costs incurred to date on a capital project that is statements. incomplete and not in use, or for system implementations, when the system is not in production at the end of an accounting period. Work in progress projects are not amortized until in use or in production. 3. SIGNIFICANT ACCOUNTING POLICIES Art Bank assets Basis of accounting The Art Bank assets are carried at cost less accumulated amortization. The cost, The Council considers itself to be an “other government organization”. These less any estimated residual value, is amortized using a straight line method over financial statements have been prepared in accordance with Canadian public the estimated useful lives of these assets which is 50 years. sector accounting standards (PSAS) as promulgated by the Chartered Profes- sional Accountants (CPA) of Canada. Musical Instruments
The Council’s significant accounting policies are as follows: Musical instruments, which have cultural and historical value, are recorded at nominal value in the Statement of Financial Position as a reasonable estimate of Financial Instruments the future benefits associated with such assets cannot be made. All financial instruments are initially measured at fair value. The following table identifies the Council’s financial assets and liabilities and identifies how they are subsequently measured on the Statement of Financial Position:
52 Notes to the Financial Statements (continued) March 31, 2018 Employee future benefits Revenue recognition
i) PENSION BENEFITS i) PARLIAMENTARY APPROPRIATIONS Substantially all of the employees of the Council are covered by the public Parliamentary appropriations are considered government transfers and are service pension plan (the “Plan”), a contributory defined benefit plan recognized as revenue in the year for which they are approved by Parliament. established through legislation and sponsored by the Government of Canada. Parliamentary appropriations received for specific projects are deferred Contributions are required by both the employees and the Council to cover when the stipulations and circumstances create an obligation that meets the current service cost. Pursuant to legislation currently in place, the Council has definition of a liability. They are subsequently recognized on the Statement of no legal or constructive obligation to pay further contributions with respect to Operations when the obligation no longer exists. any past service or funding deficiencies of the Plan. Consequently, contribu-
tions are recognized as an expense in the year when employees have rendered ii) RESTRICTED AND UNRESTRICTED CONTRIBUTIONS service and represent the total pension obligation of the Council. The Council receives contributions that are externally restricted for specific purposes by the donors. ii) SEVERANCE BENEFITS Externally restricted contributions that are to be held in perpetuity are In 2012, under labour contracts and conditions of employment, the decision recognized as revenue in the year in which they are received. The externally was made to terminate the severance benefits. The severance benefit obliga- restricted contributions that are not held in perpetuity, externally restricted tion for eligible employees who will retire or resign, that accrued up to June 30, investment income, and realized and unrealized gains and losses on externally 2012 and remains unpaid, is adjusted at year end to reflect actuarial gains and restricted investments are recorded as a liability until the resources are used losses and salary adjustments. for their specified purpose, at which time the contributions are recognized as revenue. iii) RETIREES’ BENEFITS Unrestricted contributions are recognized as other revenue in the year received The Council provides extended health care and dental benefits to its current or in the year the funds are committed to the Council if the amount can be and retired employees. Retirees pay 50% of the extended health care premium reasonably estimated and collection is reasonably assured. and 100% of the dental premium. The Council accrues its obligations as the employees render the services necessary to earn these benefits. The cost of In-kind contributions consist mostly of donations to the Art Bank assets and these benefits earned by employees has been estimated using the accrued are recorded at their appraised value as a non-financial asset and as revenue benefit method (Unit Credit). under net Art Bank results when they are received.
Actuarial gains (losses) on the accrued benefit obligation arise from differences between actual and expected experience and from changes in the actuarial iii) ART BANK RENTAL REVENUES assumptions used to determine the accrued benefit obligation. Actuarial gains Rental revenues generated from Art Bank assets are recognized in the year in (losses) are amortized over the average remaining service period of active which services are provided. They are included in net Art Bank results on the employees. Statement of Operations.
Deferred revenues - Externally restricted contributions iv) OTHER REVENUES Externally restricted income is recognized as revenue in the Statement of Opera- Other revenues consist mainly of the cancellation in the current year of grants tions in the year in which the resources are used for the purpose or purposes approved in previous years and contribution for partnership agreements. specified. An externally restricted inflow, excluding original principal, received before this criterion has been met is reported as a liability until the resources are used for the purpose or purposes specified. v) FOREIGN CURRENCY TRANSLATION Monetary assets and liabilities denominated in foreign currencies are translated Endowment principal - to Canadian dollars at the exchange rate in effect at the date of the Statement Externally restricted contributions of Financial Position. Revenue and expense items are translated at exchange rates prevailing throughout the year. Unrealized foreign exchange gains and Externally restricted contributions consist of endowments and restricted losses are recognized in the Statement of Remeasurement Gains and Losses, donations received by the Council that are required to be maintained intact. They except for the restricted portion which is recognized as a liability under are reported under Accumulated Surplus from Operations. Deferred revenues - Externally restricted contributions. Once realized, the cumulative gain or loss is recognized in net realized investment income. Reserve for excess investment income This reserve represents the sum of excess investment income since the Grants, author payments and prizes establishment of the Council in 1957 and is presented as a separate internal Grants, author payments and prizes are considered to be a government transfer. reserve within the accumulated surplus from operations. In years when net invest- They are recorded as an expense in the year for which they are budgeted ment income exceeds the amount of net budgeted investment income, an amount and approved by the Board, authority to pay has been obtained through the may be transferred from the accumulated surplus from operations to the reserve Appropriation Act, and results communicated to the applicants. for excess investment income. In years when net investment income is less than the amount of net budgeted investment income, an amount may be transferred to Operating leases the accumulated surplus from operations from the reserve for excess investment income. These transfers are approved by the Board. The Council enters into operating leases for its office accommodation which are recorded on a straight-line basis over the term of the lease. Lease inducements are recorded as a reduction to the office accommodation expense on a straight- line basis over the term of the lease.
53 Notes to the Financial Statements (continued) March 31, 2018 Measurement uncertainty Other related party transactions
The preparation of financial statements in accordance with Canadian PSAS Related party transactions, other than inter-entity transactions, are recorded at requires management to make estimates and assumptions that affect the the exchange amount. reported amounts of assets and liabilities at the financial statement date and the reported amounts of revenues and expenses during the reporting year. Employee Budgeted figures future benefits liabilities, the estimated useful lives of tangible capital assets, the residual and appraised value of the Art Bank assets, and the fair value of financial Budgeted figures, as approved by the Board, have been provided for comparison instruments are the most significant items where estimates are used. Actual purposes. results could differ from those estimated.
Inter-entity transactions 4. CASH EQUIVALENTS Inter-entity transactions are transactions between commonly controlled entities. The Council invests its cash in excess of daily requirements in a short-term pooled Inter-entity transactions, other than restructuring transactions, are recorded on a fund managed by State Street Global Advisors. All instruments held in the pooled gross basis and are measured at the carrying amount, except for the following: funds are rated R1 (low) or A (low) or better as rated by a recognized bond rating agency. These funds are comprised of securities issued by different levels i) Inter-entity transactions are measured at the exchange amount, which is the of government, chartered banks and corporate issuers. Except for instruments amount of consideration established and agreed to by the related parties, when guaranteed by governments, no more than 10% of the short-term portfolio is undertaken on similar terms and conditions to those adopted if the entities invested with any one issuer. The Council’s cash equivalents invested in the were dealing at arm’s length, or where costs provided are recovered. pooled fund was $13,810,000 at March 31, 2018 (2017 - $23,198,000). ii) Goods or services received without charge between commonly controlled entities are not recorded.
5. PORTFOLIO INVESTMENTS
(in thousands of dollars) 2018 2017
Unrealized Unrealized
Cost losses gains Fair value Cost Fair value
$ $ $ $ % $ $ %
Canada Council Endowment
and Special Funds
Pooled funds
Canadian Equity 7,544 124 - 7,420 2 7,190 7,293 2 Global Equity 143,170 1,219 2,672 144,623 45 97,274 130,706 43 Fixed income 70,269 637 - 69,632 22 70,269 72,256 24 Alternatives 20,630 - 9,641 30,271 9 20,630 28,821 10 Money market 1,325 - - 1,325 0 1,312 1,312 0 Canadian Equity 32,142 - 2,623 34,765 11 30,572 31,559 10 Real estate 10,129 - 2,214 12,343 4 11,037 13,497 5 Infrastructure 13,462 - 7,518 20,980 7 13,387 19,194 6
298,671 1,980 24,668 321,359 100 251,671 304,638 100
Killam Fund
Pooled funds
Canadian Equity 7,840 18 600 8,422 12 7,931 8,243 13 Global Equity 29,179 255 526 29,450 44 19,847 26,615 41 Fixed income 13,690 130 - 13,560 20 13,690 14,071 22 Alternatives 5,298 - 2,469 7,767 11 5,298 7,394 11 Real estate 2,697 - 601 3,298 5 2,927 3,585 5 Infrastructure 3,434 - 2,130 5,564 8 3,418 5,077 8
62,138 403 6,326 68,061 100 53,111 64,985 100
Total investments 360,809 2,383 30,994 389,420 304,782 369,623
54 Notes to the Financial Statements (continued) March 31, 2018
Unrealized gains/losses on investments are primarily due to the timing of the market prices, foreign exchange movements, or the early years in the Asset Classes Market Value Minimum Benchmark Maximum business cycle for some investments. Annually, the Council assesses each of its Canadian equities 13% 5% 12.5% 20% investment instruments against specific criteria to determine whether there is Global equities 45% 35% 40% 45% objective evidence that the adjusted cost may not be recovered and is therefore Fixed income 21% 15% 25% 35% impaired. The Council does not consider these investments to be other-than- Alternatives 10% 5% 10% 15% temporarily impaired as at March 31, 2018. Real estate 4% 0% 5% 10% Infrastructure 7% 0% 7.5% 10% The Council manages two separate portfolios, the Canada Council Endowment Money market 0% 0% 0% 10% and Special Funds as well as the Killam Fund. The Killam’s will requested that their The money market asset class includes short-term pooled funds used for future donation be invested separately. Apart from the Killam Fund, all other externally investments in alternatives and capital commitments in limited partnership units restricted contributions are consolidated into the Canada Council Endowment and of real estate and infrastructure funds. These funds had a balance of $1,325,000 Special Funds and represent 8% (2017 - 8%) of that Fund with a total fair value of (2017 - $1,312,000). For the year ended March 31, 2018, these funds earned a $25,741,000 (2017 - $24,402,000). The total fair value of the externally restricted return of 0.97% (2017 - 0.77%) and the underlying investments had an average investment including the Killam Fund is $93,802,000 (2017 - $89,387,000). weighted term to maturity of 23 days (2017 - 36 days). All transactions for the externally restricted contributions are originally paid by or Investments in the equity pooled funds are comprised of units of five pooled received in the Council’s general bank account thus creating temporary interfund funds, two Canadian funds and three funds that are invested in the global balances. The interfund balance of externally restricted contributions owed to equity markets. The Council also has a Canadian equity segregated fund for the Council at March 31, 2018 by the Special Funds is $3,268,000 (2017 - $3,501,000) Endowment and Special Funds. The Canadian equities are measured against the and owed by the Killam Fund is $2,211,000 (2017 - $787,000). returns of the Standard and Poor’s Toronto Stock Exchange (S&P/TSX) Index. The The long-term objectives of the Canada Council Endowment and Special Funds global equities are measured against the returns of the Morgan Stanley Capital as well as the Killam Fund are to generate long-term real returns to supplement International (MSCI) All Country World Index. Investments in the fixed income the costs of administering the various programs, while maintaining the purchasing pooled fund are comprised of a mix of bonds, mortgages, emerging debt and power of the endowed capital. other fixed income instruments. The fixed income fund is measured against the returns of the FTSE TMX Universe Bond Index. Investments in the alternative The Council invests in units of equity, fixed income and alternative pooled funds, pooled funds are comprised of units of one hedge fund with diversified positions in a segregated Canadian equity fund and in limited partnership units of four across global asset classes. This investment is measured against the returns of real estate funds and four infrastructure funds. The permitted and prohibited the 91-day US T-bill plus 4%. The assets included in the real estate funds are investments, the asset mix as well as some maximum holding quantity restrictions commercial real estate properties in Canada, the United States and globally. are governed by a Board approved investment policy to mitigate risk. All of the These investments are measured against the returns of the Investment Property investments are managed by professional investment managers. Databank. The infrastructure funds include four portfolios of diversified infrastruc- ture investments. These investments are measured against the Consumer Price The Council manages its portfolio to the following benchmarks as per the State- Index (CPI) plus 4.5%. ment of Investment Policies and Goals approved by the Board. The benchmarks allow asset class allocations to vary between a minimum and a maximum.
6. FINANCIAL RISKS AND FAIR VALUE
At March 31, the measurement categories of the Council’s financial instruments, as well as their carrying amounts and fair values are as follows:
(in thousands of dollars) 2018 2017 Measurement Carrying amount Carrying amount Financial assets and liabilities categories and fair value ($) and fair value ($) Cash and cash equivalents Fair value 39,245 23,490 Accounts receivable Amortized cost 3,080 3,424 Portfolio Investments1 Fair value 389,420 369,623 Grants, author payments and prizes payable Amortized cost 69,547 59,354 Accounts payable and accrued liabilities Amortized cost 3,782 4,609
1 The detailed fair value for the investments is listed in Note 5. a) Establishing fair value • The Alternatives is a pooled fund investment which is valued at the unit values supplied by the pooled fund manager. The fund manager manages The carrying value of accounts receivable, grants, author payments and prizes multiple funds with different strategies within the fund and determines the payable and accounts payable and accrued liabilities approximates their fair unit’s fair value using the closing market prices for some strategies when values due to their short-term maturity. available or using a valuation model with non-observable data for other The fair values of the investments are determined as follows: strategies.
• Equity, Fixed Income and Money Market pooled fund investments are valued • Real estate investment values are supplied by the fund managers using at the unit values supplied by the pooled fund managers, which represent independently audited appraisals which are based on a valuation model with the Council’s proportionate share of the underlying net assets at fair values, non-observable data. The independently audited appraisals are obtained determined using closing market prices. annually as at December 31 and extrapolated to March 31.
• The Segregated Canadian equity fund is valued using closing market prices at • Infrastructure investment values are supplied by the fund managers using the financial statement date. internally determined appraisals. The appraisals are based on a valuation model with non-observable data and are audited annually as at December 31 and extrapolated to March 31.
55 Notes to the Financial Statements (continued) March 31, 2018 b) Fair value hierarchy • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based The financial instruments are grouped into Levels 1 to 3 based on the degree to on observable market data (unobservable inputs). which the fair value is observable: The fair value hierarchy requires the use of observable market inputs whenever • Level 1 fair value measurements are those derived from quoted prices such inputs exist. A financial instrument is classified to the lowest level of the (unadjusted) in active markets for identical assets or liabilities. hierarchy for which a significant input has been considered in measuring fair • Level 2 fair value measurements are those derived from inputs other than value. quoted prices included within Level 1 that are observable for the asset or The following table presents the financial instruments recorded at fair value liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). in the Statement of Financial Position, classified using the fair value hierarchy described above:
Financial assets at fair value as at March 31
(in thousands of dollars) 2018 2017
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
$ $ $ $ $ $ $ $
Cash and cash equivalents 25,435 13,810 - 39,245 292 23,198 - 23,490
25,435 13,810 - 39,245 292 23,198 - 23,490
Portfolio Investments
Canada Council Endowment
and Special Funds
Pooled Funds Canadian Equity - 7,420 - 7,420 - 7,293 - 7,293 Global Equity - 144,623 - 144,623 - 130,706 - 130,706 Fixed Income - 69,632 - 69,632 - 72,256 - 72,256 Alternatives - - 30,271 30,271 - - 28,821 28,821 Money Market - 1,325 - 1,325 - 1,312 - 1,312 Canadian Equity 34,765 - - 34,765 31,559 - - 31,559 Real Estate - - 12,343 12,343 - - 13,497 13,497
Infrastructure - - 20,980 20,980 - - 19,194 19,194
Killam Fund
Pooled Funds Canadian Equity - 8,422 - 8,422 - 8,243 - 8,243 Global Equity - 29,450 - 29,450 - 26,615 - 26,615 Fixed Income - 13,560 - 13,560 - 14,071 - 14,071 Alternatives - - 7,767 7,767 - - 7,394 7,394 Real Estate - - 3,298 3,298 - - 3,585 3,585 Infrastructure - - 5,564 5,564 - - 5,077 5,077
34,765 274,432 80,223 389,420 31,559 260,496 77,568 369,623 Total 60,200 288,242 80,223 428,665 31,851 283,694 77,568 393,113
During the year, there were no significant transfers of amounts between Level 1 and 2.
56 Notes to the Financial Statements (continued) March 31, 2018
The following table reconciles the changes in fair value of financial instruments classified as Level 3 during the year:
(in thousands of dollars) 2018 2017 Alternatives Real estate Infrastructure Alternatives Real estate Infrastructure fund funds funds Total fund funds funds Total $ $ $ $ $ $ $ $ Canada Council Endowment and Special Funds Opening balance 28,821 13,497 19,194 61,512 26,936 10,045 12,201 49,182 Total gains (losses) recognized in re-measurement statement 1,335 (226) 1,573 2,682 1,734 121 1,318 3,173 recognized in externally restricted contributions 115 (20) 138 233 151 11 115 277 Purchases - 1,373 279 1,652 - 4,228 5,985 10,213 Sales - (2,281) (204) (2,485) - (908) (425) (1,333) Closing balance 30,271 12,343 20,980 63,594 28,821 13,497 19,194 61,512 Killam Fund Opening balance 7,394 3,585 5,077 16,056 6,911 2,683 3,313 12,907 Total gains (losses) recognized in externally restricted contributions 373 (56) 471 788 483 25 382 890 Purchases - 343 70 413 - 1,107 1,511 2,618 Sales - (574) (54) (628) - (230) (129) (359) Closing balance 7,767 3,298 5,564 16,629 7,394 3,585 5,077 16,056 c) Risk management other limits set out in the Council’s investment policy. The Council is exposed to a variety of financial risks as a result of its activities. The Council mitigates credit risk through monitoring of the outstanding These risks include credit risk, liquidity risk and market risk (price risk, interest balances. As at March 31, 2018, there were no significant amounts past due and rate risk and currency risk). no impairment losses have been recognized.
In order to manage risk, the Council invests in a diversified portfolio that is managed by professional investment managers. The Council’s invest- ii. LIQUIDITY RISK ments are guided by a Statement of Investment Policies and Goals which is Liquidity risk is the risk that the Council will not be able to meet its financial approved by the Board and reviewed on an annual basis. The Council is assisted obligations as they fall due. in the oversight and management of its portfolio by an Investment Committee that includes independent experts with experience in both the investment The Council receives most of its revenue by way of parliamentary appropriation field and the asset classes being invested in. In addition, the Council uses the from the Government of Canada. That revenue is temporarily invested in the services of an independent investment consultant to assist the Investment short-term pooled fund until it is required. Committee in its work. As the investment markets continue to evolve, the Liquidity sources in the event of an immediate need to fulfill the timely Investment Committee recommends adjustments to the asset mix to reduce payment guarantee include overdraft facilities and cash and short-term the overall risk of the portfolio to an acceptable level. investments in marketable securities.
i. CREDIT RISK The objectives of the Council with respect to the management of liquidity is to ensure that the capital value of its short-term pooled funds is preserved, that Credit risk refers to the risk that a counterparty will default on its contractual the investments are sufficiently liquid and that investment income is distributed obligations resulting in financial loss to the Council. in cash when possible.
At the Statement of Financial Position date, financial assets exposed to credit The liquidity available from the short-term funds and portfolio investments risk include cash equivalents, portfolio investments and accounts receivable. ensures that the Council is able to meet its obligations and commitments. The The carrying amounts of these financial assets represent the maximum credit majority of the investment portfolio can be redeemed within three days. As risk exposure at the Statement of Financial Position date. well, the permitted and prohibited investments are governed by Board-ap- Through its investments in units of equity, fixed income and alternatives pooled proved short-term and long-term investment policies which ensure that the funds, in a segregated Canadian equity fund and in limited partnership units liquidity risk is minimized. of four real estate funds and four infrastructure funds, the Council is indirectly exposed to the credit risk of the underlying investments of those funds. These The Council has an investment policy that enables it to withdraw annual risks are managed at the investment manager level. Their objectives are to amounts from its investment portfolio valued up to 3.5% for the Endowment invest in high quality financial instruments with creditworthy counterparties, by and Special Funds as well as for the Killam Fund (2017 - 3.5%) of the previous limiting the amount that can be invested in any one counterparty and by using three-year average market value using balances at September 30.
57 Notes to the Financial Statements (continued) March 31, 2018
The following table presents a maturity analysis based on historical data for the Council’s financial liabilities as at March 31:
Between Between Less than six months to one to Over two 2018
(in thousands of dollars) six months one year two years years Total $ $ $ $ $ Financial Liabilities Grants, author payments and prizes payable 15,465 24,843 23,469 5,770 69,547 Accounts payable and accrued liabilities 3,117 290 375 - 3,782 18,582 25,133 23,844 5,770 73,329
iii. MARKET RISKS The Council’s investments in a short-term pooled fund, fixed income pooled The Council’s activities are primarily exposed to price risk, interest rate risk and fund and alternatives pooled fund are indirectly affected by movements in their currency risk. fair value as a result of fluctuations in market interest rates. The impact of the fluctuation cannot be assessed since Council holds units of pooled funds and The investment managers’ directives are to manage the Council’s market risks not the underlying assets. on a daily basis in accordance with the Council’s policies. The Council’s overall market positions are monitored on a quarterly basis by the Board and the Currency risk Investment Committee. Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Price risk Council is exposed to limited foreign exchange risk on revenues and expenses Price risk is the risk that the fair value or future cash flows of a financial denominated in a foreign currency. The majority of these transactions are instrument will fluctuate because of changes in market prices (other than those denominated in US dollars and Euros. arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or At the Statement of Financial Position date, the non-Canadian dollar factors affecting similar financial instruments traded in the market. denominated portion of its investment portfolio represents $33,569,000 (2017 - $28,421,000). Given the small size of the foreign currency exposure compared The Council is exposed to market price risk arising from its investments in units with the total assets of the Council, currency risk is not considered significant. of equity and alternative pooled funds, in a segregated Canadian fund and in limited partnership units of four real estate funds and four infrastructure funds. 7. EMPLOYEE FUTURE BENEFITS Price sensitivity The following details the Council’s portfolio sensitivity to a 5.8% increase or a) Pension benefits decrease in the market prices, with 5.8% being the sensitivity rate used when reporting price risk internally to key management personnel and representing Substantially all of the employees of the Council are covered by the public management’s assessment of a reasonably possible change in market prices. service pension plan (the “Plan”), a contributory defined benefit plan established through legislation and sponsored by the Government of Canada. The sensitivity rate is determined using the 4 year historical standard deviation Contributions are required by both the employees and the Council. The Presi- for the total fund as determined by the investment advisor. dent of the Treasury Board of Canada sets the required employer contribution rates based on a multiple of the employees’ required contribution. The required At March 31, 2018, if market prices had a 5.8% (2017 - 5.3%) increase or employer contribution rate is dependent on the employee’s employment start decrease with all other variables held constant, the increase or decrease in date. For employment start dates before January 1, 2013, the Corporation’s remeasurement gains and losses and deferred revenues – externally restricted contribution rate effective at year-end was 1.01 times (2017 - 1.01) the employ- contributions for the year would have been a total of $22,265,000 (2017 - ee’s contribution; and for employment start dates after December 31, 2012, $19,679,000) due to the increase or decrease in the fair value of financial assets the Corporation’s contribution rate effective at year-end was 1.00 times (2017 measured at fair value. - 1.00) the employee’s contribution. A separate sensitivity analysis for level 3 financial instruments is not possible The Government of Canada holds a statutory obligation for the payment given the underlying assumptions used are not available to Council. of benefits relating to the Plan. Pension benefits generally accrue up to a maximum period of 35 years at an annual rate of 2% of pensionable service Interest rate risk times the average of the best five consecutive years of earnings. The benefits are indexed to inflation. Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. (in thousands of dollars) 2018 2017
The interest rate exposure of the Council arises from its interest bearing assets. Employer’s contributions $ 2,073 $ 1,992 The Council’s cash includes amounts on deposit with a financial institution Employees’ contributions 1,981 1,748 that earns interest at market and preferred rates. The objective of the Council is to manage its exposure to the interest rate risk of its cash by maximizing the interest income earned on excess funds while maintaining the minimum liquidity necessary to conduct operations on a day-to-day basis. Fluctuations in market rates of interest on cash do not have a significant impact on the Council’s results of operations.
58 Notes to the Financial Statements (continued) March 31, 2018 b) Severance benefits 8. DEFERRED REVENUES - EXTERNALLY RESTRICTED The Council provided severance benefits to its employees based on years of CONTRIBUTIONS service and final salary. These benefits were not pre-funded and thus had no assets, resulting in a plan deficit equal to the accrued benefit obligation. These The deferred revenues from externally restricted contributions consist of benefits no longer accrue as per the collective agreement. The employees were accumulated income, both realized and unrealized, which has been deferred given the option to either cash out their severance benefits or to wait until until the resources have been used for the purpose or purposes specified by the their departure. The obligation was adjusted at year-end to reflect employees’ endowment. The restricted endowment principal of $37,569,000 is required to actual salary level. The total obligation will be paid from future appropriations be maintained intact and is reported under accumulated surplus from operations or other sources of revenue. Information about the plan benefits, measured as (see Note 12). at March 31, is as follows: (in thousands of dollars) 2018 2017 Accrued benefit obligation, beginning of year $ 416 $ 458 (in thousands of dollars) 2018 2017 Current service cost 6 8 Balance, beginning of year $ 46,768 $ 39,501 Benefits paid during the year (103) (50) Transferred from investment income (Note 13) Accrued benefit obligation, end of year $ 319 $ 416 Net Investment income 15,324 4,567 Use of funds (2,051) (2,484) c) Retirees benefits 13,273 2,083 The Council has defined post-retirement benefit plans covering certain Unrealized (losses) gains on portfolio investments (493) 6,878 employee groups. These plans provide extended health and dental benefits to Reclassified to statement of operations - portfolio retired employees. Retirees pay 50% of the extended health care premium and investments (7,883) (1,694) 100% of the dental premium. In 2017-18, the Council obtained a full actuarial Balance at end of year $ 51,665 $ 46,768 valuation as at March 31, 2018. The unrealized gains and losses on portfolio investments are related to the change in fair value of those assets from the previous year.
(in thousands of dollars) 2018 2017 Accrued benefit obligation, beginning of year $ 5,039 $ 5,120 Current service cost 127 136 Interest cost 115 100 Benefits paid (99) (91) Actuarial gain (101) (226) 5,081 5,039 Unamortized net actuarial losses (1,918) (2,223) Accrued benefit obligation, end of year $ 3,163 $ 2,816
The net actuarial loss arising from the experience and the changes in assump- tions is amortized over the expected average remaining service period of the employee group which is fourteen years.
The significant actuarial assumptions adopted in estimating the accrued benefit obligations and net benefit costs are as follows:
2018 2017 Discount rate for calculation of net benefit costs 2.3% 2.0% Discount rate for calculation of accrued benefit obligation 2.2% 2.3% Initial Health care cost trend rate increase - Prescription drugs 6.3% 6.5% Ultimate health care cost trend rate 4.0% 4.0% Year ultimate rate reached 2028 2026
59 Notes to the Financial Statements (continued) March 31, 2018
9. TANGIBLE CAPITAL ASSETS Office Leasehold Work in
(in thousands of dollars) Equipment improvements Progress Total Cost Opening balance at April 1, 2017 $ 6,637 $ 7,455 $ 791 $ 14,883 Acquisitions 1,847 239 456 2,542 Transfer from Work in Progress 791 - (791) - Disposals (793) - - (793)
Closing balance at March 31, 2018 $ 8,482 $ 7,694 $ 456 $ 16,632 Accumulated Amortization Opening balance at April 1, 2017 $ 4,521 $ 2,230 $ - $ 6,751 Amortization expense 1,318 335 - 1,653 Disposals (793) - - (793)
Closing balance at March 31, 2018 $ 5,046 $ 2,565 $ - $ 7,611 Net carrying amount at March 31, 2017 $ 2,116 $ 5,225 $ 791 $ 8,132
Net carrying amount at March 31, 2018 $ 3,436 $ 5,129 $ 456 $ 9,021
10. ART BANK ASSETS ` 11. MUSICAL INSTRUMENTS (in thousands of dollars) 2018 2017 The Council created the Musical Instrument Bank in 1985, and it currently owns a Opening balance $ 19,415 $ 19,384 fine cello bow and nine prestigious musical instruments. In addition, the Council manages thirteen instruments on loan, nine from anonymous donors and four Acquisitions 38 31 from four other donors. Disposals/Donations (32) - Closing Balance $ 19,421 $ 19,415 Agreements are signed with the individuals to whom the instruments are loaned. Those agreements include clauses that stipulate how the musical instruments are to be handled in order to safeguard them. The appraised value of the Council’s The Council’s Art Bank has the largest collection of contemporary Canadian art Musical Instruments Bank as at March 31, 2018 is $53,826,000, converted from a in Canada. It includes over 17,100 paintings, sculptures, drawings, photographs value of US$41,750,000 using the March 31, 2018 US exchange rate of 1.29 (2017 and prints by over 3,150 artists. The Art Bank rents its assets to interested - $55,627,000, converted from a value of US$41,750,000 using the March 31, 2017 parties and as at March 31, 2018 has over 3,600 (2017 - 3,390) works on rental to US exchange rate of 1.33). federal government departments and agencies, associations, hospitals, schools, municipalities and private corporations. The Council insures the musical instruments at their appraised value, in US dollars. The Council uses an independent appraiser to determine the fair value of the Art Bank assets. A full independent assessment valuation of the Art Bank assets was completed in 2001 and any artwork acquired after 2001 has been independently appraised upon acquisition. Significant events such as special recognition or artist passing are known to trigger a change in valuation. Management monitors significant events and obtains independent reassessment as required. The total appraised value of the Art Bank assets is estimated at $71 million as at March 31, 2018 (2017 - $71 million).
The residual values are estimated to be greater than the cost; therefore no Art Bank assets amortization is recognized.
The Council insures the Art Bank assets for their estimated appraised value.
60 Notes to the Financial Statements (continued) March 31, 2018
12. ACCUMULATED SURPLUS (in thousands of dollars) 2018 2017 Accumulated surplus from operations Endowment - original contribution $ 50,000 $ 50,000 Endowment principal – Externally restricted contributions 37,569 37,569 Reserve for excess investment income Balance at beginning of the year 141,445 136,445 Appropriated from the accumulated surplus during the year 45,000 5,000 Balance at end of the year 186,445 141,445 Surplus Balance at beginning of the year 25,416 25,573 Appropriated to the reserve for excess investment income during the year (45,000) (5,000) Surplus for the year 49,259 4,843 Balance at end of the year 29,675 25,416 Total accumulated surplus from operations 303,689 254,430 Accumulated remeasurement gains Balance at beginning of the year 48,419 31,158 Change in fair value (27,854) 17,261 Balance at end of the year 20,565 48,419 Balance of accumulated surplus at end of year $ 324,254 $ 302,849
Included in accumulated surplus is the original contribution by the Government of Canada of $50 million, which constituted a government transfer (“Endowment Fund”) when the Council was established in 1957.
13. NET REALIZED INVESTMENT INCOME 15. CANADIAN COMMISSION FOR UNESCO (in thousands of dollars) 2018 2017 (in thousands of dollars) 2018 2017 Gains from disposal of portfolio investments $ 33,227 $ 5,570 Program expenses $ 1,318 $ 1,158 Income transferred to deferred revenues - Program - contributions received (12) (43) Externally restricted contributions (Note 8) (13,273) (2,083) Administration expense 1,332 1,211 Net gains on foreign exchange 34 272 $ 2,638 $ 2,326 Interest, dividend and other distributed income 32,983 12,502 Program expenses represent mainly the costs associated with the Commission’s Investment portfolio management costs (1,100) (1,383) activities at national and international meetings related to education, science $ 51,871 $ 14,878 and culture. When applicable, these costs are offset by contributions received from other organizations partnering with the Commission on these activities. Administration expenses represent the direct costs of delivering the Commission’s 14. NET ART BANK RESULTS programs. (in thousands of dollars) 2018 2017 Rental revenue $ 1,378 $ 1,228 16. NET CHANGE IN OTHER NON-CASH ITEMS Other income 249 218 (in thousands of dollars) 2018 2017 Administration expense (1,869) (1,617) Decrease (increase) in accounts receivable $ 344 $ ( 649) Amortization of other capital assets (11) (11) Increase in grants, author payments and prizes payable 10,193 31 680 $ (253) $ (182) (Decrease) increase in accounts payable and accrued liabilities (112) 148 At March 31, 2018, there was $683,000 (2017 - $534,000) in unearned rental revenues for artwork rental agreements signed before year-end. Increase in deferred revenues 293 558 Net change $ 10,718 $ 31,737
61 Notes to the Financial Statements (continued) March 31, 2018
17. CONTRACTUAL OBLIGATIONS AND COMMITMENTS 18. RELATED PARTY TRANSACTIONS
The Council is related in terms of common ownership to all Government of a) Grants, author payments and prizes Canada departments, agencies and Crown corporations. Other related parties Grants, author payments and prizes extending into future years are subject of the Council are key management personnel, close family members of key to the provision of funds by Parliament. Future year commitments for those management personnel and entities that are controlled, significantly influenced payments approved prior to March 31, 2018 amounted to $185,771,000 (2017 – by, or for which significant voting power is held by key management personnel $28,256,000). The future payments of grant commitments as of March 31, 2018 or their close family members. The Council enters into transactions with related are as follows: parties in the normal course of business on normal trade terms applicable to all individuals and enterprises, and these transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the (in thousands of dollars) related parties. 2019 $ 128,601 2020 56,770 During the year, the Council incurred expenses totaling $2,448,000 (2017 – $876,000) and recorded rental revenues for the Art Bank assets, contributions and 2021 400 other revenues totaling $1,021,000 (2017 – $835,000) with related parties. b) Rent During the year, the Council received audit services without charge from the The Council is party to long-term operating leases with respect to rental Office of the Auditor General, including a Special Examination report in 2017-18. accommodation. Future year payments related to operating leases as of The estimated cost for these services is $1,274,000 (2017: $280,000). March 31, 2018 amounted to $69,096,000 (2017 – $75,464,000). The future As at March 31, the Council recorded the following amounts on the Statement of payments of operating leases as of March 31, 2018 are as follows: Financial Position for transactions with related parties:
(in thousands of dollars) (in thousands of dollars) 2018 2017 2019 $ 4,196 Accounts receivable $ 501 $ 943 2020 4,047 Grants, author payments and prizes payable 44 130 2021 3,963 Accounts payable and accrued liabilities 62 406 2022 4,040 Deferred revenues 1,545 941 2023 4,122 2024-2034 48,728 19. COMPARATIVE FIGURES c) Investment commitments Certain 2017 figures have been reclassified to conform to the presentation The Council has committed funds with real estate and infrastructure adopted in 2018. investment managers through limited partnership funds. Because it takes time for those funds to be fully invested, the balance of committed capital not yet drawn at March 31, 2018 is $7,833,000 (2017 – $9,933,000). A portion of the outstanding balance of committed capital is currently invested in short-term pooled funds. d) Other commitments The Council entered into various contracts during the year creating commitments of payments in future years. Future year payments related to these commitments as of March 31, 2018 amounted to $2,258,000 (2017 – $1,102,000). Future annual payments as of March 31, 2018, are as follows:
Less than 1 year Less than 3 years Total General administration $ 841,000 $ - $ 841,000 Tangible capital assets 679,000 - 679,000 Arts community services 388,000 108,000 496,000 Program Delivery 242,000 - 242,000
62 Notes to the Financial Statements (continued) March 31, 2018
Schedule I - Grants, Author Payments and Prizes by Section 1
(in thousands of dollars) 2018 2017 Arts Programs Music $ - $ 29,259 Theatre - 28,130 Writing and Publishing - 23,437 Visual Arts - 21,853 Dance - 20,346 Media Arts - 14,804 Inter-Arts - 3,227 Indigenous Arts - 3,215 Audience and Market Development - 3,015 Equity - 1,451 Prizes 1,041 979 Canada 150 - New Chapter - 35,030 New Funding Model Engage and Sustain 64,485 - Explore and Create 57,802 - Supporting Artistic Practice 33,439 - Arts Across Canada 18,721 - Arts Abroad 13,586 - Creating, Knowing and Sharing: The Arts and Cultures of First Nations, Inuit and Métis Peoples 9,983 - Digital Strategy Fund 6,151 - Strategic Investments 2,197 278
Public Lending Right 9,775 9,774 Killam Program Killam Research Fellowships 840 840 Killam Prizes 500 500 Other Prizes and Awards Victor Martyn Lynch-Staunton Awards - 105 Molson Prizes 100 100 John G. Diefenbaker Award - 95 Other prizes and awards < $75,000 272 355 $ 218,892 $ 196,793
Note: In 2017-18 the Council transitioned to its New Funding Model, which replaced an artistic disciplinary-based model with new outcome-oriented granting programs and strategic funds. The financial information is captured by program only and therefore the comparison with previous year is not available for this schedule. The Council publishes every year Stats and Stories which will provide breakdown by artistic disciplines.
63 Notes to the Financial Statements (continued) March 31, 2018
Schedule II - Other Expenses
(in thousands of dollars) 2018 2017 Transfer General Program Delivery Administration Total Total Salaries and employee benefits $ 15,359 $ 8,585 $ 23,944 $ 21,313 Office accommodation 28 3,571 3,599 3,600 Professional and special services 361 3,156 3,517 1,674 Peers and advisory committees 3,077 - 3,077 2,598 Amortization - 1,642 1,642 1,205 Information management 86 706 792 581 Staff travel 401 96 497 521 Prizes presentation 380 - 380 390 Printing, publications and duplicating 11 299 310 323 Communications 1 275 276 295 Office expenses and equipment 5 210 215 166 Meeting expenses including members’ honoraria 55 152 207 159 Miscellaneous - 28 28 17 $ 19,764 $ 18,720 $ 38,484 $ 32,842
Schedule III - Arts Community Services
(in thousands of dollars) 2018 2017 Research and consultation $ 748 $ 1,223 Partnership and networking 1,578 712 Event costs 149 316 $ 2,475 $ 2,251
64